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A bevy of mixed reports with eyewear focusing on the negative continues to press the major averages lower in Thursday’s first half. As of 11:00 ET the “SPYder” (SPY) and “Cubes” (QQQQ) are each off a “ruffly and tumbly” 1.65% on heavier levels of investor dissatisfaction.

It hasn’t been a good start to the third quarter as Thursday continues Wednesday’s lesson in profit-taking. From the get-go, mixed-to-weak catalysts ranging have been easily shaped into their bearish worst. Spearheading the out-the-gate effort for many investors is overall disappointing same store sales from a slug of retailers (RTH, XRT).

Teen Dream Abercrombie (ANF) is stripping off 3.25 points near 51.50 after posting a worse-than-expected 11% decliner for August. Other marquee names being discounted include Nordstrom (JWN), Saks (SKS) and Macy’s (M). On the other or should I say “in the other hand”, influential names like Wal-Mart (WMT), Target (TGT) BJ’s (BJ) and Costco (COST) remain unscathed in Thursday’s action. However, the double-edged implication of that strength has today’s investors worrying the discount operators are only doing well as venues of last resort for the shop til they drop crowd….and ultimately, unworthy of any unified cheers.

In economic news, four reports delivered mixed headline results. Without too much effort though, bearish-sounding bits and bytes have gotten investors collective attention. Front and center, weekly claims increased by a surprise 15K to 444K versus estimates of 420K. The four-week moving average slipped from 441K to 438K.

Separately, the ADP report on private employment missed estimates by 3K with a pruning of 33K. Overall, the combined reports have more than a few analysts seeing the data as being consistent with a soft labor market. And in front of tomorrow morning’s closely-watched jobs report…..well, that’s more than enough to act cautiously with, for today’s bulls.

Away from a crowd intent on jeering, a third report out on productivity showed an increase of 4.3% and well-above forecasts of 3.5%. At the same time, labor costs slid by 0.5% for the second quarter. As Briefing.com notes, the decline is a likely byproduct of a weak job market, but does reduce inflation woes. Separately, the ISM Services Index came in above contraction estimates of 49.5 with a flat 50.6 reading for August. “MOOyah gone un-herd!”

“Psychic Hotline” style worries of further writedowns for America’s Anchor Bankers is prompting some jumping from the USS Bull. Leading the doom and gloom efforts, Bloomberg reported Merrill (MER) is having difficulties negotiating some intended asset sales with buyers. Shares are off 1.30 near 27. And AIG (AIG) is apparently investigating its less-strategic options (these days) of a spin-off in order to keep certain troubled securities from probing eyes fixated on the little things like balance sheets, per the New York Post.

Elsewhere, more pressured but worrisome “end is near!” pin action in commodity land (GSG, XLB, SLX, MOO, DBA, GDX) has done its part to put the broader averages into “Monbacky!” and very mad, mad money territory. That being said, drawn and quartered bulls can attempt to take some headline refuge in hitting the sell button in Thursday’s session. A lower-than-expected decline in gasoline stocks is nonetheless fueling the belief (for some) of a cooling economic climate responsible for today’s supply data. Apparently, the world’s largest glutton of the black stuff is on a forced diet, but with some token cheating going on, if we’re to believe the data miss. Intraday, shares of the US Oil Fund (USO) are off 1.45 near 87.

And finally, it’s not all bad. But emphasizing the importance of mob psychology, shares of Broadcom (BRCM) are off .40 at 22.27. In truth, with the percentage swoon in the broader market, the fractional decliner might seem like fairly agreeable pin action. However, in light of a 21% price decline over the course of two and one-half weeks and coverage initiation of “Outperform” by Credit Suisse; the real point surmised by this corner is this: relative strength or outperformance for any would-be bulls is still failing to make sense or cents of it all. Be safe.  

Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 

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