Bulletin
Investor Alert

Need to Know Archives | Email alerts

Feb. 25, 2016, 9:07 a.m. EST

It may be a bear market, but it’s not yet nowhere-to-shelter time

Critical information ahead of the U.S. market’s open

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Dow Jones Industrial Average (DJIA)
  • X
    Invesco S&P 500 Equal Weight Consumer Staples ETF (RHS)
  • X
    Gap Inc. (GPS)

or Cancel Already have a watchlist? Log In

By Victor Reklaitis, MarketWatch


Getty Images
It’s ugly out there, but at least you can still get an umbrella.

Today’s silver lining: It may be a bear market, but it’s not yet “nowhere-to-hide” time.

That’s the suggestion from Dana Lyons of J. Lyons Fund Management, who is among those finding pockets of strength even as the Dow /zigman2/quotes/210598065/realtime DJIA -1.71%  wallows 10% off its peak after a meager gain yesterday.

A consumer staples ETF /zigman2/quotes/207579253/composite RHS -1.54%  is showing strength, Lyons notes in a blog post that offers the chart below. He says “as long as something is still displaying positive relative strength, it is a good omen for the immediate-term stock market prospects.”

“It is really only during the teeth of a bear market — when there is no place to hide, everything is getting smashed and correlations go to 1.0 — that relative strength loses any and all utility,” Lyons adds.


Dana Lyons

Michael Kahn at Barron’s also sees a glimmer of hope, except that he’s focused on the retail sector rather than consumer staples. He writes that retail “now shows signs of a revival,” and some retailers “have undeniable upside trend breaks.” Those include Gap /zigman2/quotes/206554267/composite GPS -2.15%  , which reports earnings after the close today. More from Kahn in our chart of the day.

Just as saying it’s not yet “nowhere-to-hide” time is faint praise, our call of the day has the feel of a backhanded compliment. It’s provided by Citi’s global equity strategists, who have upgraded U.S. stocks /zigman2/quotes/210599714/realtime SPX -1.51% to neutral, or “not bad,” to put it in plain English. That’s up from their prior rating of underweight, which you could think of as “ugly — stay away.”

Key market gauges

Dow and S&P futures  point to a step up at the open. Oil /zigman2/quotes/209724538/delayed CLJ26 0.00%  is trading lower, and the Shanghai Composite /zigman2/quotes/210598127/delayed CN:SHCOMP -0.55% ended down 6.4%, with analysts in China blaming worries about market liquidity and other factors. But Japan’s Nikkei /zigman2/quotes/210597971/delayed JP:NIK -1.83%  managed to close higher, and Europe /zigman2/quotes/210599654/delayed XX:SXXP +1.30% is up. Gold  is lower, and a key dollar index /zigman2/quotes/210598269/delayed DXY -0.07%  is little changed.

The chart


Barron’s

In a surprise move, there has been a “retail renaissance,” writes Barron’s Kahn in his latest Getting Technical piece : A key retail ETF /zigman2/quotes/206947004/composite XRT -1.54%  is holding up after breaking out from a double-bottom pattern .

It wasn’t a “robust breakout,” but the ETF has zipped above a declining trendline, he says, noting “there are more than a few retailers showing positive signs.”

Beyond Gap, which has scored a small breakout, Kahn notes Macy’s /zigman2/quotes/201854387/composite M -1.07%  “just punched through resistance on heavy volume,” and Wal-Mart /zigman2/quotes/207374728/composite WMT -1.93%  shook off last week’s earnings miss.

To be sure, Kahn says he’s generally downbeat on the market, and the banking sector’s /zigman2/quotes/210598427/realtime BKX -0.84%  ugly chart confirms his “fairly bearish outlook.”

Plus, there are retailers showing awful action, with Restoration Hardware /zigman2/quotes/200286355/composite RH -1.77%  late yesterday issuing the “Magna Carta of whiny, red-flag, specialty retail death trap warnings,” as Jeff Macke puts it over at the iBankCoin blog .

The call


Citi

The Fed is viewed as turning less aggressive than expected with its interest-rate hikes this year, and the almighty dollar is looking like less of a headwind. Those developments have prompted Citi’s global equity strategy team to warm up a bit to U.S. stocks, upgrading them to neutral.

“Fed hikes and USD strength should prove less of a drag on the U.S. market in 2016,” the team writes in a note dated Wednesday.

Citi’s Robert Buckland and his colleagues also have become more upbeat about emerging-market stocks /zigman2/quotes/201454250/composite EEM -0.37%  , as shown in the table above. They’ve upgraded EM equities to overweight, or buy, with a preference for Asian plays over CEEMEA (Central and Eastern Europe, the Middle East and Africa).

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
28,725.51
-500.10 -1.71%
Volume: 320.97M
Sept. 30, 2022 5:55p
loading...
/zigman2/quotes/207579253/composite
US : U.S.: NYSE Arca
$ 153.79
-2.41 -1.54%
Volume: 84,730
Sept. 30, 2022 4:10p
loading...
/zigman2/quotes/206554267/composite
US : U.S.: NYSE
$ 8.21
-0.18 -2.15%
Volume: 6.54M
Sept. 30, 2022 4:04p
P/E Ratio
N/A
Dividend Yield
7.31%
Market Cap
$2.99 billion
Rev. per Employee
$162,907
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,585.62
-54.85 -1.51%
Volume: 2.22B
Sept. 30, 2022 5:55p
loading...
/zigman2/quotes/209724538/delayed
US : U.S.: Nymex
$ 61.34
0.00 0.00%
Volume: 0.00
Sept. 30, 2022 5:06p
loading...
/zigman2/quotes/210598127/delayed
CN : China: Shanghai
3,024.39
-16.81 -0.55%
Volume: 20.41B
Sept. 30, 2022 3:00p
loading...
/zigman2/quotes/210597971/delayed
JP : Nikkei
25,937.21
-484.84 -1.83%
Volume: 0.00
Sept. 30, 2022 3:15p
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
387.85
+4.96 +1.30%
Volume: 0.00
Sept. 30, 2022 11:03p
loading...
/zigman2/quotes/210598269/delayed
US : U.S.: ICE Futures U.S.
112.17
-0.08 -0.07%
Volume: 0.00
Sept. 30, 2022 4:59p
loading...
/zigman2/quotes/206947004/composite
US : U.S.: NYSE Arca
$ 56.44
-0.88 -1.54%
Volume: 7.56M
Sept. 30, 2022 4:00p
loading...
/zigman2/quotes/201854387/composite
US : U.S.: NYSE
$ 15.67
-0.17 -1.07%
Volume: 15.51M
Sept. 30, 2022 4:00p
P/E Ratio
3.03
Dividend Yield
4.02%
Market Cap
$4.25 billion
Rev. per Employee
$291,761
loading...
/zigman2/quotes/207374728/composite
US : U.S.: NYSE
$ 129.70
-2.55 -1.93%
Volume: 6.53M
Sept. 30, 2022 4:00p
P/E Ratio
25.89
Dividend Yield
1.73%
Market Cap
$352.04 billion
Rev. per Employee
$255,576
loading...
/zigman2/quotes/210598427/realtime
US : U.S.: Nasdaq
95.83
-0.81 -0.84%
Volume: 0.00
Sept. 30, 2022 5:16p
loading...
/zigman2/quotes/200286355/composite
RH
US : U.S.: NYSE
$ 246.07
-4.44 -1.77%
Volume: 629,044
Sept. 30, 2022 4:00p
P/E Ratio
11.02
Dividend Yield
N/A
Market Cap
$5.84 billion
Rev. per Employee
$593,551
loading...
/zigman2/quotes/201454250/composite
US : U.S.: NYSE Arca
$ 34.88
-0.13 -0.37%
Volume: 50.08M
Sept. 30, 2022 4:00p
loading...
1 2
This Story has 0 Comments
Be the first to comment
More News In
Markets

Story Conversation

Commenting FAQs »

Partner Center

Link to MarketWatch's Slice.