Retail Sector Dominates Wall Street!

We now have Q4 results from 18 of the 39 retailers in the S&P 500 index.

Total earnings for the 18 retailers that have reported already are up +13.1% from the same period last year on +14.6% higher revenues, with 72.2% beating EPS estimates and 77.8% beating revenue estimates.

Home Depot shares have been hit hard in the recent sell off and still remain under pressure. Home Depot shares are up +30.6% over the past year, but they are down -1.5% in the year-to-date period.

Wal-Mart shares lost ground in the recent market sell-off, but have already recouped almost half of its losses.

The company, came out with its fourth-quarter fiscal 2018 results, wherein earnings of $1.33 per share missed the Consensus Estimate of $1.36. However, it increased 2.3% year over year.

Management envisions fiscal 2019 earnings per share in the band of $4.75-$5.00. The consensus Estimate for the fiscal year stands at $4.91.

Total earnings for the 398 S&P 500 members that have reported results already are up +14.5% from the same period last year on +9% higher revenues, with 77.9% beating EPS estimates and 75.6% beating revenue estimates. The proportion of companies beating both EPS and revenue estimates is 62.1%.

Not only is growth tracking above what we had seen from the same group of 398 index members, but a record proportion are beating EPS and revenue estimates.

Looking at Q4 as a whole, combining the actual results from the 398 index members with estimates from the still-to-come 102 companies, total earnings are expected to be up +14% from the same period last year on +8.2% higher revenues…making it the highest quarterly growth rate in years.

Technically, the SP 500 as well as the NASDAQ 100 remain above the 50 day moving average.

Sentiment is favoring the bull’s ones again and volatility levels continue declining…at least in the short term.

The major threshold level on the VIX is 20 and if we can drop below that level and stay there for a few sessions, the overall market cycle will begin to gain confidence and institutional volume will begin moving back in.

The Russell 3000 Index ($RUA) fell 0.6% to snap a six-session winning streak after falling below 1,600 intraday but a level that held for into the closing bell.

Near-term resistance is at 1,610-1,620 and the 50-day moving average held with continued closes above the latter being a bullish signal.

Support is at 1,590-1,580 if 1,600 fails with a move below the latter signaling a possible short-term top.

Overall, expect price to hoover near the 50 day line over the next few sessions and possibly sink back towards the 200 day line once again.

The trading range is declining and that means fear levels in the market are lower as well. The major sector to pay attention to over the next few session remains retail and consumer discretionary…which is largely made up of retail companies.

We can expect slight increase in volatility since stability in the market is uncertain at this time and short term volatility remains near the danger threshold level of 20.