Attention May Soon Shift Back to This Space


Now that big tech stocks have reported earnings, attention may shift to the retail space.

After all, it’s November — prime time as the key holiday-shopping season approaches. There are also key headlines like quarterly results and government data at the same time industry watchers anticipate a strong showing.

Investors may find some other points interesting. First, the “neutron bomb” of dwindling foot traffic, bankruptcies and store closures has passed. Second, key players including Wal-Mart Stores (WMT) and Target (TGT) are adapting to a world dominated by e-commerce.

Third, many big stocks in the sector barely flinched when the broader market crashed in October. That may suggest they weren’t on the same liquidation lists as some big technology and industrial names. Check out the RadarScreen® here:

RadarScreen® showing 1-month and year-to-date performance of select retail stocks. Notice recent outperformance against the Nasdaq.

The first big names to report are Michael Kors (KORS), next Wednesday, November 7, and Macy’s (M) the next morning. KORS leaped on a strong set of numbers and guidance in August, thanks to successfully revamping the Jimmy Choo brand. Attention going forward will also focus on its newly announced Versace acquisition.

M performed just the opposite last time around. It ran like a horse into its report as short sellers got squeezed, but then crashed when its numbers beat estimates.

Traders may want to keep an eye on Canada Goose (GOOS) as well. A relatively new name, the specialty jacket seller has more than doubled in the last year. It reports the same day as M. The next session, November 9, consumer sentiment is due.

The following week is packed with major results from the likes of WMT, TGT, Home Depot (HD), Dick’s Sporting Goods (DKS), TJX (TJX), Nordstom (JWN) and Children’s Place (PLCE). The Commerce Department’s retail sales report is also due. Keep reading Market Insights for more information closer to the date.

Finally, it’s worth recapping some macro-level news and opinions that might have gotten ignored amid last month’s volatility spike:

  • Moody’s turned positive on retail companies for the first time since 2015 as digital investments begin to bear fruit. Deloitte’s also calling for holiday spending to increase more than 5 percent. Remember back in August the National Retail Federation raised its full-year estimate as well.
  • There’s also the familiar face of TGT CEO Brian Cornell, who continues to call the consumer backdrop the best he’s ever seen. “This is going to be a really strong holiday season,” he told CNBC last week. “As we check consumer sentiment, it’s still really high.”
  • Economic reports paint a similar picture. The Conference Board’s Consumer Confidence index rose more than expected last month to an 18-year high. Wage gains in the third quarter also surpassed estimates.

In conclusion, this isn’t a trade recommendation and everyone needs to do their own homework. But now that October’s passed and tech stocks have reported earnings, clients may want to think about what’s next on the horizon.

Advertisement #1 Trading Platform Technology - 8  years running!

Previous articleMaster Class in Florida This Month!
Next articleApple’s Message for Growth Stocks
David Russell is VP of Market Intelligence at TradeStation Group. Drawing on nearly two decades of experience as a financial journalist and analyst, his background includes equities, emerging markets, fixed-income and derivatives. He previously worked at Bloomberg News, CNBC and E*TRADE Financial. Russell systematically reviews countless global financial headlines and indicators in search of broad tradable trends that present opportunities repeatedly over time. Customers can expect him to keep them appraised of sector leadership, relative strength and the big stories – especially those overlooked by other commentators. He’s also a big fan of generating leverage with options to limit capital at risk.