Bulls continue to follow-through slightly on the heels of Wednesday’s dramatic about-face on decent enough headline fodder and better-looking technicals. As of 10:55 ET the SP-500 (SPY) is up 0.60% on day two of the market’s nascent bull and above that sometimes pesky overhead resistance now known as 50SMA support.
A wave of same-store sales results were announced this morning with results mostly better-than-expected. Market heavyweights finding bulls shopping include the likes of Target (TGT), Macy’s (M), Kohl’s (KSS), JC Penney (JCP), BJ’s (BJ) and Home Depot (HD).
Leading the way, upscale department store operator Nordstrom (JWN) is up 6.80% after it showed August same-store sales increased 6.3% versus forecasts of 5.8%. Technically, shares of JWN have gapped and rallied into “sometimes” key resistance in the form of its 50SMA and fashionable pattern of descending v-shaped highs from late April.
One name not participating in the retail buying spree is Abercrombie (ANF). The young adult apparel shop is seeing investors return shares to the tune of nearly 5% intraday despite the company reporting sales comps of 6% versus estimates of 5.7% on a 15% year-over-year net revenue increase to $1.78B.
Technically, with ANF near 34.90 shares are back below the 50SMA within a two-and one-half week lateral trading range sandwiched on either side of the key moving average. Investors looking to don some bear-wear may also note the stock’s bearish death cross back in early July.
In economic news, data has been mixed but supportive enough of the market’s latest bullish incarnation. From across-the-pond, the eurozone’s Q2 GDP came in with a flat and expected 1.0% increase while central bank officials kept its key lending rate unchanged at 1.00%.
In the U.S., the number of unemployed applying for jobless benefits fell by a larger-than-expected 6,000 to 472,000.
Benefits claims are still at elevated levels indicative of a weak labor market, but today’s reading did beat Street views of 475,000 and fell for a second straight week following a nine month high of 500,000.
Q2 nonfarm productivity fell by -1.8% but the result was mostly in-line with the Street’s anticipated drop of -1.7%. Separately, factory orders for July gained 0.1% but missed views of 0.3%.
Lastly and helping keep bulls on the right side of the technical tracks above the 50SMA, pending home sales for July surprised analysts with a much better-than-expected 5.2% gain compared to estimates of 0.0% and June’s reading of -2.8%.
Following a day in which some investors “ordered a shake” with their well-done bull in rather volatile trade tied to buyout rumors involving 3I and 3G, two nearly identically named PE groups, shares of Burger King (BKC) are up a bit more than 24% at 23.45.
This morning a definitive agreement by 3G was announced with the deal valued at $4.0B or $24 a share. Under the terms of the deal, BKC can solicit other proposals from potential suitors through October 12.
Separately and also helping flip some well-grilled bears to be sure, the bidding war between Dell (DELL) and HP (HPQ) for cloud computing storage play 3Par (PAR) has continued this morning. A fresh bid of $32 a share from Dell was quickly raised to $33 a share or $2.4B by Hewlett and a price many analysts see as having gone “too far” according to Reuters.
Intraday and with shares of PAR up 2.30% at 32.80 but below the deal price and a point removed from session highs, that bull looks ready to be served, for better or worse, in one trader’s opinion.
In those sometimes accurate heat-seeking option markets and looking to confirm those thoughts, PAR implieds having been scorched this morning by nearly 50% in September and down towards 20% for the ATMs. At the same time, back month premiums have also been very well-grilled with equally convincing percentages of more than 40% [25% to 14% IV] for mid dated and long-term contracts [27% to 14%IV].
Chris Tyler
Senior Staff Writer & Options Strategist
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