Can Retailers’ Earnings Numbers this Week Save the Sector’s Disastrous Earnings Season?

Last, week stocks’ fall was limited – despite the retail sector collapse, the disappointing numbers from Snapchat (SNAP) and the blasé rebound in the week’s economic figures in respect to what the market had been expecting. More than that, the market barely responded to the biggest Washington drama since Trump took office, i.e. the sacking of the FBI chief, James Comey, who had been investigating Trump for his ties to Russia during the election campaign.

The best earnings season since 2011 is nearing its end, with the S&P 500 and the NASDAQ basking near their all-time highs. Perhaps the biggest concern for some market analysts is precisely the fact that concern is nowhere to be found!

The largest intraday movement on the S&P 500 in almost 3 weeks was barely 0.4%! The small intraday moves in the market prompted the VIX to close at a 20-year low last week. The VIX is thought of as a trustworthy gauge of investor anxiety. Some investors – beset with concern that’s technical in nature – are more than anything else worried about the respective levels of complacency or optimism in the market, but that, in of itself, isn’t an indication that the market has peaked.

The S&P recorded 2 closing highs last week; each of which, though, were lower than the intraday high recorded on March 1, i.e. slightly beneath the 2,401 point level. The NASDAQ, which closed last Friday almost 4% above its March 1st closing high, succeeded in recording a high based on closing price as well as a high based on intraday movement.

If it seems, though, that the market as a whole is cruising along on calm and soothing waters, it would seem that the earnings season – which has been impressive to date – has some rather unpleasant surprises in store for this week. This week, investors will be awaiting the earnings numbers of Walmart (WMT), TJX, and Home Depot (HD) – along with those of other retailers – in the hopes that this coming week they’ll be able to alter the grating tone coming out of the sector.

Retailers always report in the last leg of the earnings season, 450 of the companies on the S&P 500 having reported as of Friday. The pressure is on from the digital online marketplace, something readily felt by department stores like Macy’s (M), Kohl’s (KSS), Nordstrom (JWN) and Dillard’s which all fell by double-digit percentages last week after releasing their disappointing numbers. These stocks’ losses only got worse on Friday, M ending down 18% on the week, JWN falling 16% come week’s end.

Large brick and mortar chains are getting pressed to the wall with too much floor space, in a world where mall shopping is becoming increasingly obsolete in the face of online purchases. The chain sale figures released on Friday pointed to a 0.4% rise for the month of April. Having come out beneath analyst projections notwithstanding, the figures still show that consumers are opening up their wallets, but are changing their mode of purchasing. April’s digital sales rose 1.4%.

Walmart (WMT) will be reporting this coming Thursday, with TJX and Home Depot (HD) reporting earlier in the week, on Tuesday, retailers again expected to be the dominant force this week. Of the three, only WMT is expected to report an earnings decline – of about 2%. Additional earnings reports are expected from the discount chain, TGT, along with the fashion apparel chains, GAP (GPS) and Urban Outfitters (URBN).

S&P 500 earnings reports have recorded growth of almost 15% for Q1, in large part driven by the energy sector’s year-over-year surge in quarterly earnings.

Bank of America analysts conducted a study of both the comments and commentary made by firms at the time of their earnings conference calls, in order to gauge the company’s standing vis a vis future earnings. They found that companies are more optimistic than they have been in a long time. According to the findings, firms’ word choice tends to include more words like “better” as opposed to “worse” or “weaker” – in comparison to 2010.

Index Last Daily change R2 R1 PP S1 S2
DJX 20,897 (-0.11%) Down          
SPX 2,391 (-0.15%) Down 236.91 236.18 235.30 234.57 233.69
Nasdaq 6,121 0.09% Up 132.73 132.39 132.04 131.70 131.35

In Summary for the Week:  The S&P 500 fell 0.3%, the NASDAQ ending up with gains of 0.3%.

Have a great trading week!

 

Economic Calendar

 

DAY TIME (EST) Event Forecast Impact
Monday 8:30 Empire Manufacturing Medium
Tuesday 8:30 Housing Starts Medium
Tuesday 9:15 Industrial Production Medium
Wednesday 10:30 Crude Oil Inventories Low
Thursday 8:30 Initial Claims High
Thursday 8:30 Philadelphia Fed Medium
Thursday 10:00 Leading Indicators Medium

  

Earning Calendar

 

Symbol Company AM/PM Day
TRVG trivago N.V. AM Monday
VIPS Vipshop Holdings Limited PM Monday
LBTYA Liberty Global plc PM Monday
DKS Dick’s Sporting Goods, Inc. AM Tuesday
SINA SINA Corporation AM Tuesday
WB Weibo Corporation AM Tuesday
TJX The TJX Companies, Inc. AM Tuesday
HD The Home Depot, Inc. AM Tuesday
JACK Jack in the Box Inc. PM Tuesday
URBN Urban Outfitters, Inc. PM Tuesday
AEO American Eagle Outfitters, Inc. AM Wednesday
TGT Target Corporation AM Wednesday
LB L Brands, Inc. PM Wednesday
FLO Flowers Foods, Inc. PM Wednesday
CSCO Cisco Systems, Inc. PM Wednesday
WMT Wal-Mart Stores, Inc. AM Thursday
BABA Alibaba Group Holding Limited AM Thursday
RL Ralph Lauren Corporation AM Thursday
PLCE The Children’s Place, Inc. AM Thursday
GPS The Gap, Inc. AM Thursday
ADSK Autodesk, Inc. PM Thursday
ROST Ross Stores, Inc. PM Thursday
MCK McKesson Corporation PM Thursday
AMAT Applied Materials, Inc. PM Thursday
CRM Salesforce.com, inc. PM Thursday
DE Deere & Company AM Friday
CPB Campbell Soup Company AM Friday
FL Foot Locker, Inc. AM Friday

  

Today’s Picks – Day Trading!

Symbol Breakout Breakdown Momentum Momentum
ED $80.21   JUNO CYBR
ATVI $58.23   DDD JWN
NXPI $107.02   MOMO RL
V $93.00     CVS
JWN   $40.70    
HP   $56.73    
FLR   $46.50    
LB   $49.00    

 

New York Strategy Swing

# Date Stock Long\

Short

Statues Data Close Profit\

Loss

1 3.4.2017 ARNC Long Close 31.3.2017 -2.52%
2 3.4.2017 GME Short Close 10.4.2017 +1.95%
3 5.4.2017 IPXL Long Close 11.4.2017 +7.03%
4 13.4.2017 NKTR Long Close 21.4.2017 +0.61%
5 25.4.2017 LULU Short Close 2.5.2017 -0.17%
6 26.4.2017 GNC Long Close 28.4.2017 -4.39%
7 28.4.2017 CARA Long Close 1.5.2017 -3.23%
8 1.5.2017 AAOI Long Close 2.5.2017 +0.54%
9 3.5.2017 SCSS Long Close 9.5.2017 -1.71%
10 4.5.2017 CRZO Short Close 5.5.2017 +0.30%
11 8.5.2017 WTW Long Open   +6.39%
12            
13            
14            
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17            
18            

 

Today’s Picks – Swing “New-York Strategy

No.1 –    AAN

Company Name Aaron’s
Entry Point 35.24
Stop Area 34.64
1st Target 35.70
Swing Target 37.67
Avg. Volume 800K
Sector Services | Rental & Leasing Services
Earning Date
Risk Rate Normal
Risk\Reward Ratio 4.05:1