Stocks were down a bit ahead of the open but action looked largely random heading into the latest Retail Sales report, which was the worst since last February.
The number showed retail sales fell 0.9% month over month vs. expectations of a 0.1% dip and a previous reading of 0.4%. While this number is very bad, it could mean we can get a rate cut sooner than expected — so stocks rallied.
This caused the long bond (TLT) to rally sharply.
We’re also getting an important Industrial Production report at 9:15 a.m. ET. It’s important because the Basic Materials (XLB) sector is breaking out of a consolidation phase while the U.S. dollar is breaking down.
And if XLB can break out, that’s very important for blue-chip stocks.
The big players today are XLB, Consumer Staples (XLP) and Communication Services (XLC), which are all moving higher. On top of that, the Semiconductor ETF (SMH) is also rising into the gap.
However, Applied Materials (AMAT), an important chip stock, is down almost 5% this morning on earnings.
This is all very important information to consider when picking individual stocks.
China (FXI), meanwhile, is breaking out, up 3% premarket, which is good for Chinese stocks but does not make me happy, especially with the dollar breaking down.
Gold is also moving higher again because of the dollar’s breakdown…
I’ll cover all that, my daily hitlist of longs and shorts and more in this morning’s “Premarket Must Watch” video!
Roger Scott
Roger Scott Trading
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