The Day Ahead: Make War, Not Love

 | Feb 08, 2013 | 8:03 AM EST
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Sometimes taking an outward stand is absolutely necessary, and I suggest doing this today -- if you've missed the move to bear country, as I referenced Thursday -- to bring a couple fence-sitting bears into your camp.

Believe me, there are throngs of smart-money folk that have quietly moved to the sidelines, either directly, by scaling out of long positions, or by waiting for one more clue before they collect the chips they've won so far for 2013. Your job is to not only exit the free-liquor party before the police show, but to encourage a few friends to leave as well. To help you get them to leave, here are some handy facts you can offer.

Weekend Market-Stalking Essentials

Shortly, data wherever it shall be found, must be eye-poppingly positive as to support grand visions on the global economic story by the middle of 2013. Is this baton handoff to grandiose data from good-enough data currently unfolding? I say no. Let's utilize retailers seeing as Feb. 7, 2013 basically marked the end of an era with sector monthly reporting (big names will no longer report).

Limited Brands (LTD)

  • Merchandise margins were higher year over year, benefiting from an extra week of sales (January was a five-week month). With this extra week of sales came additional opportunities to sell full-price goods. At the core, in other words, margins were probably softer than management's plan (something succinctly conveyed by the reiteration of guidance on a strong January sales beat). Blaming the economy seems proper, especially as Limited's sales appeared to have slowed toward the second half of the month.

Cato (CATO)

  • Sales in the latter portion of January were "significantly worse" than the 4Q12 trend.

Urban Outfitters (URBN)

  • The market seemed to be OK with the preannounced fourth-quarter sales, but not this fella. In a drilldown, Urban's sales were fueled by online, core sales at the store were flat in the holiday quarter.
  • Grand economy ingredients: sales at an Urban are strong at both distribution channels. Nice tie-in here with the limp non-revolving consumer credit print (defined: "print" is the actual number).

Ann Taylor (ANN)

  • The effects of Superstorm Sandy apparently "lingered." #Banning corporate jargon for a second, this comment implies that unplanned Sandy debt is still to be addressed with stale incomes, hence impacting buying decisions.
  • A no vote on the "bright colors" at the wallet-friendly Loft division is a helpful reminder that consumers remain reluctant to tie up funds in the closet when spending it on inflationary food (listen to the Costco (COST) free monthly sales recoding) is a choicer action.

Macy's (M)

  • It's January was so amazing that it raised its earnings guidance back to the range it originally forecasted (up until November).

Target (TGT)

  • Transaction size was nearly flat despite Target stores offering expanded sections of food and cosmetics. You should now be envisioning tumbleweeds in discretionary departments of the store.

Kohl's (KSS)

  • Value stock? Right, I hear ya. Listen, I have been negative on the stock for a while and prefer to keep on that call. All Kohl's January sales upside told us was that it had to give the store away to clear excess merchandise. It's hard to get confidant in light of that.
  • Don't enjoy combing through retail monthly sales report for insights on the broader market? Cool, hey winning is not for everyone. What do you think about this stuff, though.

Price Action


  • Relatively positive news on January sales met with modest selling (Limited Brands, Kohl's, TJ Maxx).
  • Relatively negative news was severely punished (Ann Taylor, Bon-Ton, Cato).

Heavy Machinery

  • Joy Global (JOY) and Caterpillar (CAT) acting like dogs, oddly in line with the iShares Emerging Market Index (EEM), which happened to peak on Jan. 2. Somewhere in this price action there is validation for the renewed market concerns on Europe. Doesn't China ship merchandise to the EU?


  • NYSE short-interest ratio has risen a touch this week. How do I know? I follow it daily.
  • Hearing a greater number of gibberish debates, which I have used through the years (yes, I patented this term ... eat your heart out Apple and Samsung) to identify negative shifts in market sentiment. Here the debate appears to be centered on selling stocks vs. an exhaustion in buying activity instead of the hopium that filled the lungs of bulls in January.

I enter the weekend roaming bear country.

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