Groups leave clues, and winning groups leave their biggest clues on down days. And on Monday, we got a real "proof of life" from none other than retail stocks.
Retail had a lot of winners on a real loser of a day, and I believe buyers will go back to these stocks the moment that overall selling dries up or we catch a bounce. Traders know that if these stocks managed to withstand Monday's onslaught, these names will fly once things get better (as they almost always do).
Many retailers were strong all day long Monday, but you didn't see it because both Amazon (AMZN) and Walmart (WMT) were down so much. Costco (COST) , Home Depot (HD) and Target (TGT) couldn't really hold on either, although the latter tried to mount a half-hearted rally at both the opening and closing bells.
But there was a ton of strength elsewhere in the sector. Abercrombie & Fitch (ANF) , American Eagle Outfitters (AEO) , Gap (GPS) , Ross Stores (ROST) and Kohl's (KSS) all had strong momentum all day long.
Macy's (M) also stood out as a real winner. Some of that might have been because CEO Jeff Gennette announced some pretty aggressive online initiatives -- everything from using virtual reality to sell furniture to promising mobile checkout in all stores by year's end. On top of fixing the balance sheet and showing a recent turn in same-store sales, these moves have really made Macy's a hell of a story.
Rallies at Abercrombie & Fitch and American Eagle likewise just keep plowing forward. Talk about unlikely! Abercrombie at least beat analyst expectations for its latest quarter, but AEO didn't. I know my technical-analyst colleague Bruce Kamich at our premium site Real Money thinks these rallies are long in tooth, but I believe they might have more staying power than many expect.
That's also kind of the way I feel about Urban Outfitters (URBN) after its last quarter, although I wish I could be as bullish as CEO Richard Hayne. He crowed about URBN's excellent comps and a fashion look that could be good for "anywhere from six to seven years." Now that's confidence!
You also have to be impressed that Gap has managed hold on to a lot of the 7.9% increase that it saw after the chain reported substantially better-than-expected numbers a few weeks ago. Monday's 49-cent rally was pretty much a green badge of courage.
And while Nordstrom (JWN) only rallied by four cents on Monday, it was impressive all day long. The move higher almost seemed to be on earnings, as call-option activity was almost nil.
It's hard not to notice that these are all mall-based stores (including enclosed mall spaces). While no one would ever want to call a bottom for the long-suffering mall space, I think that of many of the remaining mall operators, these stocks are hanging in tough.
As I keep saying, Kohl's cannot be given up. Retail turns take a long time -- but when they hit, they last, and I think KSS is biding time to make another assault at new highs.
Or consider Ross Stores. The stock got pounded when it last reported earnings, falling 5%. But ROST has been working its way back up since then, and we can't dismiss the fact that it rose 29 cents on Monday (Wall Street's worst day since the market's February decline rumbled in earnest).
TJX Cos. (TJX) also stood tall for most of Monday, losing just two cents a share. You get a turn in the tape and the money is flowing back into that name for sure.
In fact, consumer-discretionary stocks held up well overall. Carnival Corp. (CCL) reports earnings on Thursday, but the gun-jumpers were all over it on Monday, sending the stock 72 cents higher.
CCL is now just five points from its all-time high. Could someone be bidding that up idly, or might CCL be another good place to be on a pullback?
Olive Garden parent Darden Restaurants (DRI) reports earnings on Thursday, too, and I liked what I saw out of it for most of Monday even though the stock finished 18 cents lower.
All in all, my take is that no one is chiding the consumer -- particularly the one who shops in the mall. Watch this group if we get hit again. I think it can rally first if we're going to get a rally at all.