GK 8/20/14

The News

TRANSCRIPT

GARY: Its not the news, its how the markets reacts to the the news. Why am I saying this? Because in the last week, just letting you know, Macy’s lowered their numbers. The stock had a little mini gap down last week, it’s gone right back up to highs. Today, Target, crappy numbers! The stock was down, finished up over a buck on volume, and just keep in mind Macys is at the highs, Target is more at the lows. Lowe’s, the brother of Home Depot, the stock gaps down, finishes up nicely on heavy volume. What do these three have in common? They are all retail.
We told you, up until about last week that retail stocks were acting horribly. We went through our retail list, horrid, gross and now all of a sudden bad news comes out and the stocks are getting jacked up. What is with that? Well, back to the point. It’s not the news it’s how the market reacts to the news. Maybe the market is looking at something forward, I don’t know but the laws of fear and greed and supply and demand are what we follow and I just found it interesting and just to mention to you at the outset here, retail looks like it’s getting the bid for the first time in a while. In fact, when I look at the two ETF’s that make up retail, RTH doesn’t trade a lot but you have one big gigantic ten month base that broke out yesterday. The XRT is the other one that is setting up for potentially breaking out. Combine that with Home Depot which I did a dissertation on yesterday, about how we thought that was a pretty darn good break away gap, but we were hopeful because of its lower beta that it would sit around a little bit…no it was up two and half bucks today. So, that helped too. As I went through retail earlier today and I’m going to do a little bit at the close, you are getting a bid there and they are on the radar for the first time in quite a while. And, some of the them have some big big bases that we are following.
So memo: lesson, when the news is reported as bad by the companies and the stocks reverse and go up, that is good news. When the news is reported as good by the companies and the stocks go down, that is bad and typically it defines bullish and bearish phases in the market, that sector or group. So, just letting you know, I noticed that today and I thought I would mention it early before we get into everything else.