3:05 pm ET: Holiday retail figures released today came in well under analyst estimates as Hurricane Sandy and consumer jitters over fiscal cliff issues tanked the entire industry group. Retail and apparel stocks were hit hard with high-end retailers feeling the most pain as Coach ($COH), Michael Kors ($KORS), and Tumi ($TUMI) all were discounted by 6%. Surprisingly, JC Penny ($JCP) was one of the few bright spots. This is an interesting development considering how many on Wall Street have written off this retailer--could it be that the company's aggressive turnaround strategy is starting to pay off?
Analysts at Oppenheimer seem to think so. They reiterated their Buy rating on Monday saying, "J.C. Penney is undergoing one of the most significant transformations in the history of retail. Near-term challenges are likely to persist, but we believe a much more profitable company will emerge over time." The stock has rebounded off its November 16th low by more than 25% and is in the process of filling an earlier gap (put in on Nov.9) between $20.65 and $21.65. A move above the latter level would be bullish with $30 being its next area of overhead resistance. Major options activity today is being recorded in the December 20 & 21 weekly calls (some folks made a lot of intraday dough!).
Market action today has been muted. The major averages are in stasis as the investment community awaits further news regarding fiscal cliff status. This week's low volume trading environment means greater market swings are possible. While this might be a dream situation for day traders and swing traders, it may unnerve long-term investors. If you happen to fall into the latter category, I would suggest sitting back and waiting until the status of the fiscal cliff is resolved before entering into--or adding to--long positions. Use this time to shore up your tax situation by selling your losers to offset your winners. (Consult with your accountant if you're unsure what course of action you should take.)
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