Retailers and the Warmth

The New York Times sums up what this warm weather in the northeast is meaning for retailers: troubles (Click Here). As noted a few weeks back, perhaps a slight offset to the negative impact on the retailers, is the positive impact for builders and construction companies. We'll see.

As a quick anecdotal aside: number one son and I went for a quick retailing jaunt in Woodbury, NY today - to the sprawling 220 store Woodbury Commons Outlet and the nearby Super Wal Mart. Both were quieter than I had been bracing for. Wal Mart was shockingly quiet, even the cashier remarked how she was trying to figure out "where everyone was", in her words. At the Woodbury outlets, the lot was only half full, but it is an outdoor outlet and only 25 miles to the south is the 3.5 mln sq ft indoor Palisades Mall, or 10 miles to the north, the 1.1 mln sq ft Crystal Run Mall. At Woodbury Outlet, it should be noted that the Coach Outlet (COH) was mobbed. Simply unbelievable... mobbed, with people buying, otherwise many stores we visited were quiet. My son, Ben, simply hated Coach (as one would expect for a 1st grader)... LOL, but my wife will love her new bag.

Wal-Mart.... no line at check-out on the Saturday before Christmas?! That was simply amazing. The Super Wal Mart that we visited in Monroe, NY has always had one of the worst run front ends, so today's easy check-out had to be due to a lack of customer traffic and not better organization. And indeed, the store seemed quieter that usual for the weekend before Christmas. My son and I swung through for some basic food shopping items. We did look around for some unplanned give gift buying opportunities, but didn't find anything; and I think that's part of the big problem that Wal Mart is still failing to overcome. It just can't seem to break out of the mold of serving the basic, no frills needs . I'm actually surprised that Mart CEO Lee Scott has last as long as he has.

Snowman's Funeral Revisted

As noted in the December 10th "Snowman's Funeral" post, warm December weather not only had the potential to send natural gas futures sliding (which it did), but to also impact a variety of other sectors of the economy including winter apparel. Tonight on Drudge...

"Retailers grumble about first 'Global Warming Christmas'; disastrous sales for cold-weather clothing, from cashmere caps to wool scarves... Developing... "

No surprise to you, Dear Reader.

Christmas At The Movies

This is one of my all time favorite scenes from "A Christmas Story", with the classic line, "You'll shoot your eye out kid!"

Today's Wallstrip Is Hilarious! Make Sure to Click It On To The Right! ---------->>>>

The Wallstrip team has been producing a series of sharp videos profiling quality names in corporate America. They've outdone themselves this time by going into their vault and revealing the audition tape of the man himself - Jim Cramer!! Click the Wallstrip link to the right for a great pre-holiday laugh.

A Few Friday Notes

I've got some down time ahead of a Costco run with the better half a little later. Mall lots were jammed by 10 o'clock this morning around the area as many shoppers now wait for as long as possible to see what discounts the retailers will roll out at the last minute. Wal Mart is among the retailing stocks down today. NY Post devotes some ink to its marketing troubles.

Sometimes Wall Street research can be eye opening. Merrill has a note discussing the future of Yahoo! and AOL. The two could either end up merging with each other, or they could seek separate transactions with other competitors, according to highlights of the research report. The report noted that Microsoft could be an acquirer in the space muscling out traditional media acquirers. While MLCO maintained a buy on YHOO, it did lower 2007 estimates citing the recent management shakeup and the outlook for Panama. Regardless of which company ends up doing what with whom, it looks like most who were either original AOL shareholders, or long time Time Warner shareholders, or long time Yahoo! shareholders will still retain the coveted title of.... Bagholder. ouch.

Apple has become the subject of morbid fascination for me. iPhone has been the subject of much speculation, we'll soon be getting earnings, the chart is starting to look shabby, ect. This site: http://www.looprumors.com/ has some interesting chatter which throws the Cingular name into the mix.

A variety of analysts loved the RIMM numbers that were out yesterday, but here again another one that's had a huge run and to no avail... the stock has stalled out today. It has really been an interesting situation for shares of Goldman Sachs, Adobe, now Nike and RIMM. Perhaps the New Year will bring better times for these high flyers, or more consolidation?

12/22/2006 Morning Market Comment

Posting will be limited today ahead of the holiday weekend.

Stock futures modestly higher... with durable goods printing higher for November, prices flat, consumer spending higher.

Half day of trading for most products in Chicago will mean a very quiet day for Wall Street.

The big mover is nat gas... slumping almost 3% this morning. First day of winter here in the NY Metro features partly sunny and a high of 44! I don't what it is with my fascination with the World Sunlight Map... but the Earth's Shadow is now at it's largest in the northern hemisphere http://www.die.net/earth/ and the promise of summer's return will begin a little later today.

I'm out the door this morning for more pre holiday activities!

Quick Gold Comment

Now that I'm set up with a new data and chart provider with far better analytics, I'm able to take a closer and better look at things. It was an early Christmas present. One of the analytics which I was missing was stochastics and what I now see is that gold is coming out of a very oversold situation. If we can hold through the light holiday chop and slop of the next week at present levels, I'm actually liking that the 50 day has crossed back above the 200 day moving average and this may mean we don't retest $600. I also like that ETF demand for gold has been strong with StreetTracks holding over 441 tons. Another reasons to like gold is that the dollar hasn't been able to reclaim much lost territory since the favorable employment data. There are other reasons as well, but it's late and I'll save that for another time. Here's there gold chart... Let's face it, that gold chart looks like a wreck out of the springtime peak, but there is the hint that the consolidation came to an end with the run in late November to $650 and that a new upward channel is in the making... time will tell. This is one area that I am planning to put capital to work in with alacrity in the New Year.

Here's the Philly Gold and Silver Index... all things considered, it has held up remarkably well... a testament to consolidation in the industry and expectations that gold and silver are not finished yet. 120 has been triple bottom support for the XAU and notice the 50 day is crossing over the 200 dma as well...

Copper & Hank McKinnell

Since I started this blog Thanksgiving week my bias has been BEARISH on Copper as it consolidates from its blow off top of earlier this year and as LME inventories rise on cooler than expected demand from China and a slower U.S. housing market. The copper slide has accelerated during the month of December. Today, the slide was enhanced by the GDP being adjusted to a 2% annual pace in the 3rd quarter along with the negative reading in the Philly Fed Manufacturing report, though I understand Hank McKinnell, the outrageously wealthy and now retired CEO of Pfizer will be subsidizing the Philly factories for the rest of his life, so there are no worries there! Here's the copper chart... By double clicking the chart, you can get a bigger view and you'll notice that I've thrown in a 300 day moving average since the 200 day has been handily broken. Copper seems destined to do what many other commodities have done, even the entire CRB, in breaking through very long term moving averages. 300 day could mean another 10c leg down to $2.85 a pound. If it drops below $2.85, McKinnell, from what I hear, will step in and act as a market maker and permanently support the copper market! Go Hank!

But notice the upper RSI portion of the chart: relative strength is at the lower end of the range and that has often preceded sharp near term bounces. An even stronger indication that a bounce might be in order is that thestreet.com's Jim Cramer said earlier today that copper is a "fiasco" which he wants nothing to do with (Click here for the Cramerian fun and games). Wow.. sounds like it's time to load up!

Ok, seriously now, there is indeed a supply abundance in the short dated contracts which is one of the reasons that Cramer ticked off and is indeed a good reason why Copper could test the 300 day - something it hasn't done since 2005. So while I think it is looking like we're heading for a test of the 300 day moving average, I wouldn't be surprised to first see a brief rebound, or dead cat bounce.

**CEOs and companies named in this post while resembling real life, outrageously paid and retired incompetent boobs who were let go from poorly run real world drug companies were purely fictional and coincidental.

GOOG - Google Gets Another Table Pounder

In scanning through the flyonethewall.com this evening, I couldn't help but to notice this entry... Wow, no doubt premised on Goldilocks still being perky and not a tired old hag.

Google-GOOG initiated with a Buy & $650 target@CANT
Cantor believes Google will continue to benefit from the secular shift of advertising and marketing dollars to the Internet and they see no signs of business hitting the "proverbial wall." :theflyonthewall.com

It was just the other day that I noted the bad chart formation of Google: http://buttonwood1792.blogspot.com/2006/12/while-i-was-out-goog-adbe.html

What I wonder about with respect to some of these pie in the sky buy recs is what type of organic growth or otherwise they're expecting out of Google. Perhaps in advertising and marketing there's room to grow, but in the area of traffic and searches, Google may be much further along than officially thought... Which may be good, but then again, not so good if there's no room for further growth. (Here's an eye opening perspective).

RIMM - Research in Motion Follow Up

So it looks like the head and shoulders bottom is being confirmed to a degree with a run in the stock this evening. The options were too expensive and risky for my blood and even if the Jan135 calls go fairly deep in the money tomorrow, many will likely still lose money unless the stock runs past $143. This evening the stock moved to about $141-1/2.

Great Customer Service

True story, I kid you not. I called a company today - which shall go unnamed - for customer service. I got voice mail which said, "Thank you for calling our customer service department. We are in a meeting to improve customer service, please call back later."

More Violations

Just a few, simple charts to throw up (which is what some Apple bulls may feel like doing), showing violations of their 50 day moving averages.

The first is Apple. It got up close to mid-90's last month and ran into a brick wall after hitting a lifetime high. By the way, I stopped into an Apple Store earlier in the week at the mega Palisades Mall in West Nyack, New York where you could barely walk around. It was like the old Star Trek episode where the planet was so crowded that everyone was packed together like rush hour in the Tokyo subway. Well, it wasn't that bad, but business was booming and my daughter is going to love her iPod color player when she gets on Christmas.
Those iPods were going faster than bananas at a chimp convention, but apparently someone on the Street must have realized that everyone this side of the next star system would have to buy an iPod to keep the stock roaring past $100. Today AAPL has managed to bust down below its 50 day moving average. This bears some watching. The break below the 50 dma is similar to what happened at the start of the year which followed a blow off top and ended up being a fairly long lasting slide down to the 200 dma.

Let's look at QQQQ. It is just today moving a tenth away for the 50 day.

QQQQ has spent the better part of four months above the 50 day moving average - similar to its run of late 2004 as seen on the chart. It's slump below the 50 dma was a lot sharper and faster in early 2005, but the similarities are striking; so this is something that will need to be watched closely as well if it makes the move below.

RIMM - Research In Motion

In looking through a variety of analyst coverage on RIMM there are some who love the stock and some who hate it. That in itself is unusual. There are some analysts who communicate their ideas about RIMM with unusual fervor, almost as if they're blasting away on a chat room message board. AmTech in particular has been telling clients to be aggressive buyers ahead of earnings saying recent weakness is a buying opportunity ahead of results - seeing 25% upside to their $160 target. But Citigroup thinks that while Pearl sales have been strong, they feel Pearl has cannibalized sales of other Blackberry products and recently lowered their target from $104 to $92. So the dichotomy of thought is about as wide as you will find where analyst opinion on a stock is concerned on Wall Street. The point and figure chart shows this stock is not going to drift one way or the other after earnings tonight: It's actually pretty impressive that this one managed to hold support at its 50 day moving average recently (see below) and it really has the look of a short term REVERSE head and shoulders with the neckline being roughly at $135. You could also boil the last few weeks of trading down and make an argument for a bullish pennant formation.

The range of the calls and puts is between the $160 strike on the call side and $120 on the put side where volume is over 1,000 contracts today in the January chain. I'm just staying off to the sidelines. I doubt RIMM does two huge gap ups quarter to quarter, but there's a good chance the trend can remain higher unless they disclose they've royally screwed up since the last earnings report.

While I generally hate the idea that the best idea on Wall Street these days is this lame idea to pump and buy stocks at all time highs (it is pervasive) there are some exceptions and RIMM could be one of them. Companies with near monopolies fit into the "exception" category. Of course, the issue for RIMM is becoming just how long they hold their veritable monopoly. Tonight is going to be very interesting.

12/21/2006 Morning Market Comment

Stock futures are flat and since we're going into the Christmas homestretch trading is likely to become even duller than it was yesterday. The chart below of the S&P 500 shows the ongoing upward channel, and so long as the downward range of that channel isn't broken in the 1400 area (very clear to see) it will likely be more of the same for the rest of the year - range bound action. But as noted in recent posts about factors like low stock put to call ratio and the lowest volatility in 13 years, or even the post yesterday about the divergence between the Dow30 and the Dow Transports, or even the wayward movement of the Nasdaq Composite away from its upward channel - the New Year promises to be interesting for the stock market.

It's been interesting to see corporate earnings in recent days in the retailing and retailing related space. NKE numbers good, but not great enough to get the stock to go meaningfully higher this morning. CIBC summed it well with an increase in its stock target, but also noting that the stock will likely take a breather for a few months after its big run. These things don't go higher for ever. What I want to know was who bought at the AH high yesterday of $100.75?

Bed Bath and Beyond - one analyst calls it "Best of Breed", and I think that's accurate. But charts don't lie, and as noted yesterday, it was not able to pierce $42 on two runs recently. This morning on a miss it's down to $38.77. Of course, we know what happened earlier in the week to Circuit City.

Some of these corporate results and subsequent guidance are starting to have a topish feel to them. Granted, nothing is collapsing, or crashing, but many stocks which have had mega runs to multi year or lifetime highs are suddenly in holding patterns. Even Goldman Sachs after wildly beating Street has seen its stock stuck at the $200 mark. It again goes back to basics like the troubles emerging in the transportation stocks and growing questions over what's going to happen in the economy in '07 - soft, or hard landing? The Buy High - Sell Higher Camp may be running into some trouble. What will the high flyers of '06 do for an encore in '07? The latest 3rd quarter growth estimate shows GDP at 2% annual rate as the housing market continues to take a toll on the overall economy. That's a 2% pace in Q3 compared to 5.6% in Q1. Can't wait to see how 4th quarter GDP is shaping up.

The big earnings report due after the bell today is RIMM - talk about a flyer and raging debate over that one. Pearl is the keyword with RIMM. Has it saved the day? Did they ship out enough, or has it cannibalized other RIMM business. If only I had the definitive answers. But I will take a look at the charts and options on that a little later even as I dash out later for more holiday prep.

Iran is finding there's an economic cost to developing nukes... it's having trouble developing oil projects.

The knives are drawn in the BP succession battle (Click here)

Schack Attack

I want to put in a good word for my friend Peter Schacknow who is Senior Producer at CNBC's Breaking News Desk. I hear that desk was actually made by an old Norwegian craftsman with exacting detail - hand planed with just the right touch of freehand routering. Actually, I'm not exactly sure where they got that desk from - it could have been Irving R. Levine's old desk for all I know, but it's a great desk for sure, and greater still is that Peter is now manning it at CNBC!

Peter is also blogging about the frenetic pace of things going on at that desk and the news that's being covered. Check out his blog here: http://www.cnbc.com/id/15837548/cid/97549. Peter and I have had the pleasure of working together in the past and he's a pros pro with valuable insights. Make sure to add Peter's blog to you regular list of daily 'must reads'.

Quick Thoughts on NKE and BBBY

NKE beat by 2c when a special tax arragement with the Dutchmen is factored out, but margins were flat... that's on a $100 stock... ohhh-kaaay. Looks like the Jan95 puts might be a great buy at the open Thursday morning, especially if for some kooky reason the stock opens higher. We'll see what happens in the morning. What can I say, "buy high - sell higher" just doesn't float my boat". NYSE AH trading just plain stinks, so we won't have a good read on the true direction until the morning.

BBBY, not quite Blood Bath and Beyond, but still down 3% for the day after it came up light on top and bottom line numbers. As noted earlier, there was reason to believe that the puts would be the better way to go. Yes, retail IS a tough business.. though I do love my garbage can with the lid that opens automatically, bought during the 3rd quarter at Bed Bath and Beyond. Had I bought 740,000 of them, I would have made their quarter for them.

NKE - Nike

The stock has been a one-thousand pound gorilla of late

That chart is indeed the true Magilla. Jan105 calls actually look like a cheap shot at 85-cents. Where NKE is concerned these days, it doesn't hurt that Warren Buffet recently raised his stake in the company, or that Adidas recently warned, or that Nike has a collaboration with Apple, or that Nike could surprise with a stock split announcement. Some analysts, however, have cautioned that Nike could miss estimates this time around because of a shift toward casual skate-type products and European-styled silhouettes. Wouldn't that be nasty. But most analysts love the stock, including UBS which has a target of $112. Stocks that trade at lifetime highs keep me wary especially consumer stocks in a slowing consumer environment.

BBBY - Bed Bath & Beyond

I've been a bit closer to home than expected today since number-1 son is home with a cold... so doing things around the house ahead of the holiday. Earnings of 52-cents a share are expected at Bed, Bath and Beyond after the bell today according to the Reuters survey. BBBY probably meets, if not exceeds... they are a catagory killer. I'm just wondering what's up with all the action in the Jan45 call options? Over 2,000 have traded today on a stock hovering at about $40 a share. Given the shabbiness of this chart action... ... that seems surprising since the stock has failed a few times to run past the $41 area. I've got no dog in the fight, but I'd be inclined to go with the Jan40 puts, where volume is actually heavier today, given that retailers have been forced to spend more on ad spending and to discount more heavily this year. In the last few days IV has ticked up from 29 to 33, so the risk for a move of a few dollars after earnings is being factored in, but no the $5 move that the Jan45 call players are hoping for. Guidance is probably where the downside risk may be, but it could end up being a draw as well. I just don't have the ability to know, so no play for me.

Housing Woes Recapped

Last night I linked to the horrifying study on the coming epidemic of subprime mortgage defaults. This morning on the Roubini blog http://www.rgemonitor.com/blog/roubini he has a complete recap of the mortgage situation.... worth a read.

A Tranny Breakdown in the Making

With Fedex (FDX) down 2% on what the press is calling "tightened" guidance next year, the Dow Transportation average, known affectionately as the 'Trannies" on the street are heading south as well. This chart does not engender confidence not only in the transports, but in the overall market... Let's do a Skippy to Jiff comparison and throw a Dow-30 chart up as well...
As usual, choosier bulls have definitely chosen the Dow lately... but there could be trouble ahead. While the Dow has continued to bop along in its fairly tight upward channel the Trannies started to break down last October and today broke below its 200 day moving average. The head and shoulders pattern in the Dow Transports is unmistakable and for how long the Dow Theory rule can be broken - where the Dow-30 keeps going higher while the transports falter - remains to be seen. In the words of Larry to Curly in warning that he might anger Moe over a scheme about to go badly wrong, "I'd be careful if I was you."