Investors saw a nice rally on Friday as lines at retail stores were long and roughly 139 million people went out and shopped during the first 5 days of the holiday shopping season. This could very well be the beginning of the year-end rally we have been looking for and will watch closely to see if the data points tell the same story as our gut. Looking into the market right now, we think that retail and technology should outpace the general market while commodities lag into the close. Should the fiscal cliff be averted then we would expect commodities not to lag, but at this time it appears that we will have to wait until December at the earliest for a deal to be reached.
We have no economic news due out today but will have some starting tomorrow.
Asian markets finished mixed today:
All Ordinaries - up 0.27%
Shanghai Composite - down 0.49%
Nikkei 225 - up 0.24%
NZSE 50 - up 0.09%
Seoul Composite - down 0.15%
In Europe markets are lower this morning:
CAC 40 - down 0.38%
DAX - down 0.37%
FTSE 100 - down 0.42%
OSE - down 0.53%
We did a good bit of reading and research over the holiday weekend and with all of the attention being on retail with 'Black Friday' events we were able to get a better grasp on some of the retail stocks we follow. First off, it appears that investors believing that JC Penney's (NYSE:JCP) is going to turn the corner this quarter will be disappointed as it appears that event is at best a quarter or two away. Also, as it pertains to the sales which occurred we must note that Penney's was the store with the least impressive accommodations as it opened up after nearly every other national retailer. Not having sales and instead deciding to have everyday low prices is one thing, but not maintaining the same hours as competitors during the busiest time of year is a big mistake in our opinion. Some analysts think that Penney's stock has already priced in negative news for this quarter, but we think not. There is still 10-20% downside left especially if the holiday season is a disappointment.
It does appear that Gap, Inc (NYSE:GPS) is on track to have its best holiday season in some time as it has the Gap, Banana Republic and Old Navy brands cranked up. The consensus in the industry is that the company will have to discount less than competitors to attract shoppers to their stores and should experience higher ticket prices and margins due to this. The stock is a bit off of its 52-week high, but with sales figures to be released and what we think will be a very good holiday season we think that the stock will trend above that previous high water mark before year end.
One stock which has appeared to be dead is Research In Motion (RIMM) which is the maker of the BlackBerry family of devices. The stock came back to life on Friday as another analyst came out and raised their price target to $15/share from $12/share. That was not the first analyst last week to say bullish things about the company, so it is obvious that Wall Street is beginning to turn bullish on the company's outlook ahead of the launch of BlackBerry 10 which now appears to be set to debut on January 30, 2013 and might be available to launch a month ahead of schedule. Only time will tell if investors got ahead of themselves on Friday by pushing the shares up $1.40 (13.65%) to $11.66/share, but right now analysts are jumping on board with the revamped product line to be released soon.
Hewlett Packard (NYSE:HPQ) saw shares bounce back 4% on Friday after having to break the bad news about Autonomy earlier in the week to investors. It was a relief rally and we think that things will only get worse before they get better. It certainly appears at this time that the founder of Autonomy is going to stand by the accounting methods and looks poised to fight this all the way. That is dangerous for Hewlett Packard and we are reminded of the cockroach theory - the idea that there is never just one. We would not be surprised to learn of other issues here, but most certainly would steer clear until this accounting issue is resolved and Hewlett Packard has a better understanding of how this happened.
For long-time readers who are day-traders, we would just like to point out that it looks like Rosetta Genomics (NASDAQ:ROSG) is heating up again. Shares rose $0.56 (13.15%) to close at $4.82/share on Friday with volume of 1.5 million. We like this as a trading issue, but remember with this stock we buy in the morning to sell before the close in order to protect any gains or at a minimum lessen any losses.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.