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8/17/22 Wall Street’s Retail Rally

News:

Tuesday was a mixed day for stocks but a clear win for retail.

  • The Dow Jones and S&P 500 ended the day in positive territory, with gains of +0.7% & 0.2%, respectively.
  • The Nasdaq fell 0.2%
  • Russell 2000 ended flat
  • There was a near-even divide between advancer and decliner … 47% to 48%

Retail Winners

Photos of storefronts, target, walmart, home depot and lowes.
Image from Reuters

Walmart (WMT) reported earnings, beat expectations, and reiterated positive end-of-year guidance. Its shares rose more than 5% on the day.

Home Depot (HD) rose 4% after its earning call.

The retail giants acted as a rising tide for consumer-facing stocks. The top sectors of the day…

  • Consumer Staples (XLP) +1.1%
  • Consumer Discretionary (XLY) +1.1%

The take-home from these two earnings reports: Consumers are still spending despite the higher prices.

Meme Stock Don’t Stop

It was another wild day for the meme stocks too…

  • Bed Bath & Beyond (BBBY^) nearly doubled intraday and closed up 29%
  • Gamestop (GME^) added 6%
  • fuboTV (FUBO) spiked 45%
  • Blue Apron (APRN) rose 16%

The Losers…

It’s not all rainbows and unicorns…

Of the 11 sectors we track, 4 ended the day in the red.

  • Energy (XLE) -0.2%
  • Healthcare (XLV) -0.3%
  • Technology (XLK) -0.3%
  • Real Estate (XLRE) -0.4%

Technicals:

Since the Nasdaq entered a bull market, it’s more likely to react predictably to support and resistance levels.

We’ve marked the key levels we see on the chart below.

Nasdaq 100 Chart with support and resistance levels marked.
QQQ Daily Candles – Chart via thinkorswim

This morning, RSI levels remain overbought. 

The overhead resistance could provide the market with the selling pressure needed to relieve the overbought conditions. Afterward, the bull market can continue.

But until then, the market may continue to squeeze higher.

Our other signals

  • The VIX remains in a bullish stance
  • The put-to-call ratio is neutral

Timing:

Today should be another fun day on Wall Street…

  • Retailers Target (TGT) and Lowe’s (LOW^) report earnings premarket
  • Minutes from the July FOMC meeting drop at 2 p.m.
  • We’ll have eyes on the meme stocks too

Watchlist:

*Low Float
^Open Position

*AEY support at $2
*FPAY support at $2
MAXN support at $20
BCAB support at $10
SUNW support at $4
COGT support at $14
SIGA support at $22
AERI resistance at $12
COCO support at $14
RYTM support at $23
TCDA support at $12
RAD support at $10
VUZI resistance at $10
VERU on watch
INFI support at $1.30
CPRX on watch

Secondary watchlist … +100m float

PCT support at $10
GEO^ support at $7.50
SPPI support at $1.4
TCRT resistance at $2
BFLY resistance at $8.75
ABCL support at $12
BNGO support at $3
^GERN support at $2.20

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