Wednesday, February 26, 2014

Retail Sector Analysis - 2/26/14

The Retail sector has been a poor performer ranking #32 out of 33 sectors over the trailing 3 months with a -2.0% loss, and #39 over the trailing 6 months with a 6.4% gain. In MarketSmith's industry group rankings 13 of the 20 retail industry groups rank in the bottom third of all groups, and 8 of the groups rank in the bottom 10.

That may be changing. As of last weekend over the trailing month the sector ranked #20 out of 33 (-1%), and for the trailing week ranked #13 (+0.8%). This week retail is the best performing sector through Wednesday's close with a 3.2% gain, and was the second best performing sector for the day with a 1.7% gain. Over 20 retail stocks gained 5%+ today, second only to the 23 stocks from the medical sector which performed the same feat (medical is the hottest sector and has 626 stocks vs. only 307 in the retail sector). Week to date 11 of the 20 retail related industry groups rank in the top 40 based on week to date price performance.

One of the industry groups with a number of attractive charts is the Retail-Apparel/Shoes/Acc group (G5621). This group ranks #7 week to date with a 4.8% gain, and in just 3 days has gained +28 in MarketSmith's industry group to #147.

Ross Stores (ROST) has a descending trend line break in heavy volume. ROE 48%, EPS growth rate 29%, but quarterly sales have been declining.

L Brands (LB) is under accumulation, A/D "B-", 50 day up/down volume ratio of 1.0, 25 day ratio 1.6. EPS 93, EPS growth rate 30%.

Abercrombie & Fitch (ANF) gained 11.2% today on volume 256% above average after announcing earnings of 1.34 vs. 1.03 consensus.

DSW Inc. (DSW) is also under accumulation and broke higher through a descending trend line today.

Urban Outfitters (URBN) is another descending trend line break:

American Eagle Outfitters (AEO) also broke higher through its descending trend line.

The Retail-Whlsle-Automobile group (G5014) has a MarketSmith industry group rank of 189 but has perked up over the trailing one and two week time periods.

Kar Auction Services (KAR) is showing good accumulation along the right side of this cup shaped pattern. RS 76, EPS 73, and institutional sponsors have increased 237 > 286 > 361 > 392 over the last 4 quarters.

Asbury Automotive (ABG) is showing accumulation as it works its way towards its pivot in this double bottom base. EPS 96, RS 67, EPS growth rate 43%, ROE 25%.

Autonation (AN) is 2% past its pivot out of a double bottom base. EPS 94, RS 65, EPS growth rate 29%, ROE 20%. AN is under accumulation, although the 50 day up/down volume ratio is only 0.9 the 25 day ratio is almost double at 1.7.

Lithia Motors (LAD) also appears headed higher. EPS 97, RS 58, EPS growth rate 87%, ROE 22%, institutional sponsors have increased 288 > 300 > 331 > 345 over the last 4 quarters.

Sonic Automotive (SAH) chart is a little messier but shows the same accumulation over the past 2 weeks:

Group I Automotive (GPI) has a poor "D" A/D rating but is following the rest of the group with a descending trend line break in heavy volume:

The Retail-Home Furnishings group (G5710) has a MarketSmith industry group rank of #193 but ranks #24 in price performance over the past week and a half with a 4.1% gain.

Tuesday Morning (TUES) is showing very strong accumulation along the right side of its cup. A/D "A-" with sponsorship gains of 197 > 204 > 240 > 246 over the last 4 quarters.

Restoration Hardware (RH) is seeing decent accumulation as it works towards its pivot out of this double bottom base. institutional sponsors have increased 111 > 208 > 265 > 282 over the last 4 quarters.

The Retail-Whlsle-Bldg Prds industry group ranks #188 in MarketSmith's industry group rankings but ranks #35 over the trailing two and a half weeks in price performance with a 7.1% gain.

Lumber Liquidators (LL) is recovering and looks headed for $120.

Lowes (LOW) gained 5.4% in volume 181% above average as it broke out of a double bottom base today:

The Retail-Discount&Variety industry group (G5331) is scraping bottom with a MarketSmith industry group rank of #196. However, after picking up 5.3% so far this week it now ranks #7 over the trailing two and a half weeks with a 7.1% gain.

DG, DLTR, FDO and FIVE all look like they've bottomed:


All data and charts displayed here are the property of MarketSmith, and are published here with their permission. 

The Sector Trends blog does not make forecasts and does not cheerlead with its commentary. The perspective offered is on current trends in the market, which sectors and groups are rotating, and which stocks from these groups are likely to perform best in a neutral/positive environment. Readers need to provide their own assessment of market health, employ their own risk management strategies, and trade accordingly. In a declining market nearly all equities will suffer, including those found listed here.