Cold weather plus $1.75 gasoline equal genuine bargains in the retail industry.
I know many of you are saying the only reason Macy's (M) is up is because of the layoffs and restructuring. I think that it's also up because it can get rid of its winter inventory, albeit at reduced price as the work of our own Carleton English pointed out yesterday. Don't forget, as Brian Sozzi has reported, J.C. Penney (JCP) killed it and they've got about the same merchandise mix.
But I am talking about how the consumer has more money and is suddenly realizing it because the gasoline price is lasting and the job market is more plentiful and new clothes are at last needed.
Recall that people were spending on their homes, hence why Home Depot (HD) had run. They were spending at the mall if you had the right goods: Take a look at L Brands (LB) if you doubt me. They like a bargain, as Ross Stores (ROST) is soaring in part because it can buy discounted merchandise with cash from other retailers and sell them to you for less. And they are certainly buying at Walgreen's (WBA), as we learned this morning. They won't stop buying beer, as Constellation (STZ) told us. So they are going out and spending.
Against that, of course, is the part of the economy that's hurt by a weaker China -- namely, some of the industrials that have actually been able to crack into that country -- although that's not a lot because China has done its best to keep seemingly all but Nike (NKE), Starbucks (SBUX) and Apple (AAPL) out. No secret: All three are beneficiaries of the new higher wages in southern China. (Walgreen's, Starbucks and Apple are part of TheStreet's Action Alerts PLUS portfolio.)
And of course, the oil complex with all of its wrecked equity and damaged credit is front-and-center bad. Remember before you buy an oil stock, every single company could use some more money.
Some consumer packaged-goods companies have exposure, but remember there is no slowdown in consumer spending in China and even a lower stock market may not have all that much impact because China does not have as many investors per capita as we do.
So we've got enough stocks that can go up that some can make a stand even as some can't.
And some are in the service sector, provided they haven't run. Or are on their butts.
Those are where the action is.