Before The Bell: China Retail Surges, Autos Gaining Ground, Futures Point Up
China's retail sales surged 18% because of strong demand but also inflation. Auto makers gaining ground. Futures point higher.
Bloomberg reports China's retail sales rose 18.1% in October from a year earlier. The increase marks the fastest pace in eight years with sales of clothing, electronics, and automobiles surging over 30%. As causes for the increases, one Chinese economist cited inflation and strong demand. Read Minyan Peter's article China's New Economic Challenges for more information. Also read Professor Jeff Macke's article October A Month To Forget For Retail for context of domestic plays in the U.S.
From the Bull Pen: Chinese bulls may see value in China Mobile (CHL), China's largest mobile phone operator; near-term sell-stops can be set below the 50-dma ($84.05) or, for those with more risk tolerance, recent support at $80.
From the Bear Cave: Wal-Mart (WMT) has rallied 7% in the last two days. The stock is also approaching resistance at $47, which is the downtrend line from the June highs and the 200-dma. Buy stops can be set on the other side of that level.
U.S. Autos Gaining Ground
The WSJ reports Detroit's big three auto makers have improved in quality rankings but still fall behind foreign competitors. None of the brands, however, made the top ten rankings with eight making the up the worst ten. Detroit auto makers have recently slashed production in an effort to cut costs and improve resale values. Read Professor Kevin Depew's Five Things You Need To Know from November 8th for more on consumer health.
From the Bull Pen: For those that believe U.S. auto makers have bottomed-out, long term plays may include General Motors (GM). Near-term stops may be placed on trades below $29.
From the Bear Cave: Quality aside, as the Japanese yen continues to gain ground versus the dollar, Japanese exporters will likely continue to suffer. Bearish auto plays may include Toyota (TM), buy-stops above $115, which is the downtrend line from June.
Click on Minyanville's Stocks To Watch more company-specific ideas.
Quick Check Around the World
Asian trading closed with the Hang Seng +4.90%, Nikkei +2.47%, Sensex +4.69%, Taiwan +2.47% and Shanghai +4.94%.
A quick look towards Europe finds the CAC +0.97%, DAX +0.47%, FTSE +0.41%, ATX +0.72%, Swiss Mkt. +1.02% and Stockholm -0.73%.
A Look At Commodities
Crude oil is trading higher +1.04 to 92.18 and gold is also up +1.61 to 811.90 this morning. Silver is up 0.345 to 14.955 and copper is up 3.9 to 314.60.
As of 8:30 AM EST, S&P futures are up by +12.1 points and Nasdaq futures are up by 28.8 points.
On the Radar
Retail sales: 0.2% vs. 0.2% cons.
Retail sales ex-auto: 0.2% vs. 0.3% cons.
PPI: 0.1% vs. 0.3% cons.
Core PPI: 0.0% vs. 0.2% cons.
At 10:00 AM EST Business Inventories will be released with consensus estimates at 0.4%.
Click here for Minyanville's full Trading Radar.
Good luck and have a great day!
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