July 26, 2022, 12:12 am EDT
Calm Market and Nervous Retailers
The calm market today cannot hide the nervous retailers. Aftermarket Walmart (WMT) gave earning warnings that caused a major breakout in the extended trading hours. WMT is down -10% and other retailers suffered altogether: TGT. AMZN, BBY
As SNAP dragged down META, GOOGL last week, this earnings season did not look bullish so far for both the internet and retailers.
Although the rebound wave carried about 8-12% gains in the past six weeks, there is no visible leadership. It is simply another “dead cat bounce”. The best strategy is to stay on the sideline with cash positions in the portfolio. We consider the upside potential is limited but the downside risk could be significant.
The coming Fed FOMC meeting about rate hikes and Q2 GDP numbers could play major roles in determining the market’s next move.