Friday, July 09, 2010

And The Stock Markets Rallied... Because Of....

Oh yeah. Another triple digit advance for the Dow. :D

Time to check out them news to see wassap! :D

Wall Street up for third day on data and retail sales

  • NEW YORK: Wall Street rose for a third straight day on Thursday, July 8 as investors were encouraged to see jobless claims fall and a handful of large retailers report solid sales.

1. Encouraged to see jobless claims fall. (?? LOL! )

Now on the DOL (Department of Labour) website:

SA stands for Seasonally Adjusted data and the NSA stands for Not Seasonally Adjusted Data. So the adjusted data showed a drop of 21k claims but the unadjusted data showed an increase of 22.5k. (
What is the difference between seasonally adjusted and non-seasonally adjusted data? )

And here is the chart of the Seasonally Adjusted Jobless Claims.

Source: Bureau of Labor Statistics

Are those jobless claim numbers so hot that it created such optimism in the market? I wonder. (ps: I wonder if I should be even focused on jobless claims in the first place! )

Ok, assume I am wrong and that the market is correct. :D

I will then ask if the optimism is shared by actual market demand. Am I seeing more demand in stocks? Time to look at the charts and see what the volume is saying again.

Do I see increase in volume? Or did the volume actually shrank compared to to yesterday?

Going up on shrinking volume?

And what about the money outflows from long term mutual funds? (Yeah, see last month's posting: Of Low Volumes And Fund Outflows From Long Term Mutual Funds )

Well, that should about the nine straight weeks of money outflow from equities again. Pessimistic Americans? Or they really, really think extremely lowly of their stock market?

2. handful of large retailers report solid sales.

Mike "Mish" Shedlock wrote the following: Following Yesterday's Hype of Fastest Growth in 4 Years, June Retail Sales a "Mixed Bag" ( a recommended reading )

  • Retail Winners Exceeding Expectations

    J.C. Penney Co. (JCP) sales +4.5%
    Macy's (M) sales +6.5% w
    Nordstrom (JWN) sales +14%
    Ambercrombie & Fitch (ANF) sales +9%

    Retail Losers Not Meeting Expectations

    Target (TGT) sales +1.7% vs. expectations of +2.7%
    Kohl's (KSS) sales +5.9% vs. +6.5% expected
    Teen retailer Wet Seal (WTSLA) sales -3.6%
    Gap (GPS) sales flat

    Those numbers may seem pretty good but June sales benefited from a late Memorial Day that pushed sales into June. Moreover, June is normally a stronger month than May. More importantly, note how estimates were ratcheted lower as the month progressed.

    At the beginning of June estimates were +3.8% in aggregate but by the end of the month the estimates (and numbers to beat), were a mere +3.2%.

    Discounting was steep.

    Here is one of the most telling comments from the article "Retailers that surpassed analysts' expectations were mostly quiet about increasing their second-quarter guidance, raising questions about how much the promotions, while aiding sales, came at the cost of lower profit margins on the items."

Yeah, these buggers were all talking about 'sales' numbers. And needless to say, lower profit margins and lower pricing would surely induce more sales!

And talking about Mish, he was featured on with a rather very significant editorial: Consumer Credit Drops Whopping $24 Billion in 2 Months. Do give it a read. ( Oh, ZH wrote on this also: Consumer Credit Plunges In May, April Revised Much Lower, As Government Only Marginal Lender For Two Months In A Row )