Why Traders Aren’t Buying Retail

October 7, 2002
Daniel Beighley

As
a result of the West Coast port lockout, retail stocks have
experienced heavy selling. The
major indexes chopped around for most of the day, though the trend remained down
for most of the session, with losses abounding. Attempting
to ease concerns, President Bush has announced the formation of a board of
inquiry before potentially ordering
workers back to their jobs.

In economic news, consumer
credit came in at $4.2 billion vs. an expected $11.8 billion.

U.S.
Treasury Bonds closed +’10 at 113 ’30.

The dollar
was -0.12 at 107.90.

Volume was
average at 1,521,967,000 on the NYSE, and
1,392,404,000 on the Nasdaq.

Market
breadth was negative, with NYSE declining issues over
advancing issues by a ratio of 3.42, and down volume over up volume by a 4.85
ratio. Nasdaq declining issues over advancing issues came in at 2.65, and down
volume beat up volume by a 2.64 ratio.

The
VIX
was +2.90 at 49.18. The TRIN
was +0.56 at 1.42.

Stocks in the
news:

Retailer Sears
(
S |
Quote |
Chart |
News |
PowerRating), -14.31% at 3.25, has announced that it will miss its third-quarter
earnings.

Chip giant Intel
(
INTC |
Quote |
Chart |
News |
PowerRating), +1.02% at 13.85, is one of the few stocks in positive territory
after CEO Craig Barrett said he expects conditions to improve in early 2003.

Internet
infrastructure company Cisco Systems
(
CSCO |
Quote |
Chart |
News |
PowerRating), -4.01% at 9.08, had its
full-year profit estimates cut by Deutsche Bank due to a recent deterioration in
information technology.

Investment bank JP
Morgan
(
JPM |
Quote |
Chart |
News |
PowerRating), +1.39% at 16.77, warned that its third-quarter profit will
come in below expectations due to high commercial credit costs, mostly from the
telecom and cable sectors.

Medical equipment
company Medtronic
(
MDT |
Quote |
Chart |
News |
PowerRating), +0.118% at 43.25, received FDA approval for
its Zipper stent.

Also in the medical
equipment business, Guidant
(
GDT |
Quote |
Chart |
News |
PowerRating), -2.07% at 26.00, received positive
comments in a Barron’s article over the weekend which claimed the
company’s stock is undervalued.

Electric utilities
company Entergy
(
ETR |
Quote |
Chart |
News |
PowerRating), +8.13% at 43.09, increased its third-quarter
earnings guidance to 1.45 a share vs. the Multex consensus of $1.36 a share.

Retailer TJX
Companies Inc.
(
TJX |
Quote |
Chart |
News |
PowerRating), -1.71% at 16.58, had its estimates cut by
Prudential based on the belief that it will be one of the biggest losers from
the West coast port lockout. The stock has also been downgraded by Bank of
America to “market perform” from “hold.”

Chemical company
Sigma-Aldrich
(
SIAL |
Quote |
Chart |
News |
PowerRating), -10.12% at 42.09, sold off due to an Off Wall
Street report which values the stock at $28.

Airline AMR
Corp.
(
AMR |
Quote |
Chart |
News |
PowerRating), -12.96% at 3.76, sold off after it announced a $990 million
impairment charge.

Why Traders Aren’t Buying Retail

BUY THE FEAR, SELL THE GREED

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