CNBC INTERVIEW TODAY AT 2:45 -- BEST BUY LEADS RETAIL HOLDERS HIGHER -- LOWES, TARGET, AND WALGREEN ARE CLOSE TO NEW HIGHS -- WAL-MART IS REBOUNDING
RETAIL HOLDERS NEAR 2005 HIGH... Retail stocks are the day's strongest group. Chart 1 shows the Retail Holders (RTH) very close to reaching a new 2005 high. The better performance by the retail group has actually been going on since early May when its relative strength line bottomed versus the S&P 500. It's usually a good sign for any group when it's rising faster than the general market. Most of today's gain is due to a big jump in Best Buy which is trading at a record high. But several other retailers are close to 52-week highs -- including Lowes, Target, and Walgreen. The biggest stock in the RTH -- Wal-Mart --is also starting to rebound.
Chart 1
BEST BUY GAPS UP TO RECORD HIGH ... The daily chart of Best Buy shows it gapping seven points higher (on heavy volume) to clear its late 2004 peak near 62. The monthly bars in Chart 3 also show the retail leader breaking decisively out of a five-year trading range to reach a new record high. Its relative strength line is close to doing the same. Although BBY is no doubt over-extended after today's higher gap, its longer-range chart points to still higher prices.
Chart 2
Chart 3
MORE RETAIL LEADERS ... The daily bars in Charts 4 and 5 show two other retail leaders that are close to record highs. Lowes is challenging its 52-week highs near 60. Its relative strength ratio has been rising since May. Target appears to be consolidating after having already reached a new record high a couple of weeks ago. Its relative strength line has also broken out. Chart 6 is a monthly bar chart of Walgreen. It shows the stock not just on the verge of a new 52-week high, but also trying to decisively clear its 2000 peak just over 45. That would be a doubly bullish breakout.
Chart 4
Chart 5
Chart 6
EVEN WAL-MART IS REBOUNDING ... Because of its huge size, it's always important to keep an eye on what Wal-Mart is doing. Since it's also the biggest holding in the Retail Holders (23%), traders in the RTH also need to monitor its price trend. The monthly bars in Chart 7 show that WMT has been trading sideways since the start of 2000. Its falling relative strength line shows that it's been a market laggard for the last two years. The good news is that the world's biggest retailer appears to be in an area of chart support based on a rising trendline extending back almost five years. That's a good sign. Another is that its short-term trend is starting to strengthen. The daily bars in Chart 8 show WMT trading above its 50-day average by the biggest margin since the start of the year. A close above its early May peak would turn its short-term trend higher. Its relative strength ratio is challenging its 2005 down trendline. I don't consider Wal-Mart to be one of the more attractive stocks in the retail group. But it is a good sign for the group when its biggest stock is rising instead of falling.
Chart 7
Chart 8
CNBC INTERVIEW CHANGED TO 2:45 PM ... Today's CNBC interview on Ron Insana's Street Signs show has been changed from 2:20 pm to 2:45 pm. That's show biz. We'll be talking about some crucial tests of resistance going on in the marketplace right now that may hold the clue to future market direction. Tune in if you can.
