Layoff concerns and weak retail results produce another bumpy start for market bulls. As of 11:05 ET the “SPYder” (SPY) and “Cubes” (QQQQ) are now up a benign-looking .35% that belies still-heady levels of volatility best left to the daytrading audience.
A trifecta of percentage job cuts from market heavyweights AT&T (T), DuPont (DD) and Credit Suisse (CS) was good for pressing sell side and mental buttons in front of Friday’s closely-watched monthly jobs report. Intraday, shares of the three fingered are showing less fearful reactions to the news.
In the case of the Anchor Banker Credit Suisse, shares are being hoisted by 1.75 to 25.20. Technically, the action is signaling a price reversal from a 3-Day “Not-So-Simple” Pullback. Following its announced 5,300 workforce cut, bulls appear optimistic that a yearly loss of $2.5B can be improved upon. Hopefully they gave the first pink slips to those responsible for dismal operating results that had little to do with headcount inefficiencies.
A similar situation of tone-setting alarm bells and subsequently a less panicked investor can be found in retail names that, by and large, reported weaker-than-forecast results. Spearheading, Target (TGT) is up 0.15 at 34.65 after announcing a 10.4% same-store sales decline versus views calling for an 8.9% drop. Similarly, wholesale giant Costco (COST) is up 0.39 at 51.81 despite posting an unexpected 5.0% decline versus estimates calling for an increase of 2.4%.
On the plus side and helping bulls climb the proverbial wall of worry, shares of internet retailing powerhouse Amazon (AMZN) are tacking on a second day of strong gains following Wednesday’s positive sales check data for the beginning of the holiday spending season.
Separately and also helping, well kinda sorta, the world’s largest discounter, Wal-Mart (WMT), is still attracting business from a spendthrift consumer. This morning the company posted a 3.4% sales increase and trumping views of 2.1%. Wal-Mart also now expects its December same-store comps to be at the high end of its 1 – 3% guidance range. Intraday, shares of AMZN are up 4.25 near 49.50, while WMT tacks on 0.50 for a slightly more smiley price of 54.90.
On the economic front, weekly claims data came in better-than-expected with just 509K fresh filings for benefits. That being said, the 21,000 decline remains elevated. Further, continuing claims jumped by 89,000 to 4.08M. And truthfully, given the day’s latest and not-so-greatest corporate confessionals, as well as Friday’s looming jobs data—there’s little to celebrate just yet.
In those sometimes intertwined markets, the iShares 20+ Year Treasury ETF (TLT) continue to hold and improve upon its parabolic-looking flight-to-quality bid. Separately, fresh lows are being scored in the US Oil Fund (USO). Obvious worries over weakened demand courtesy of a global recession and / or the more nefarious tinkering plot of OPEC officials attempting to rid the world of alternative energy—appear to be in play. Intraday, shares of TLT are up .66 at 110.79 and the USO is off .92 at 36.13 and neither looking very supportive, at the moment, for equities.
And finally, “More needs to be done” BernankeSpeak regarding the curbing of home foreclosures and Big Three (or two) pleas (umm, testimony) this morning have helped solidify a double top pattern. If traders can sneak a peek at an extended view intraday chart, market barometers such as the Dow Industrials (DIA) have retested the highs set from Monday’s bearish gap and failed as we move through the lunchtime hour.
Other technicians might be glad to make the bull case of the same action appearing as an extended cup-with-handle in an uptrend from Monday’s lows. However, in a market with a genuine lack of fresh leadership and the little there is failing miserably (DMND, CASY), as well a daily chart still showing lower highs—there’s reason enough to remain cautious in the short-term.
Chris Tyler
Staff Writer & Options Strategist
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual.
