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TRADE OF THE DAY: NKE

Today we bought Nike (NKE) at $53.92 a share at 9:57 AM EDT in our Real-Time Alerts. Buying back Brian McGough's long-term TAIL bullish position in one of the best companies levered to Global #GrowthStabilizing in the world. Still one of our best long ideas in retail, we buy on red.

 

TRADE OF THE DAY: NKE - NKETOTD


Construction At A Glance

We view the Architectural Billings Index as a way to gauge non-residential construction activity. Despite the index gradually easing in December, it continues to show expansion at 52.0. The index is supposed to lead non-residential construction activity by 9-12 months and thus indicates that activity may strengthen by mid-2013.

 

Construction At A Glance - arch


Playing The Retail Giants

Hedgeye Retail Sector Head Brian McGough has been quite vocal recently about his short Macy’s (M)/long JCPenney (JCP) trade. After the news hit that that Macy’s Chief Administration Officer Thomas Cole would be retiring after 41 years with the company, the stock sold off this morning. We covered the position in our Real-Time Alerts after buying it into the close yesterday and booked a gain. It still remains one of our top short ideas in retail.

 

Playing The Retail Giants - JCPM

 

On the other side of the trade is going long JCPenney. Improving sales trajectory for 2013 and incremental improvement in store layout and their e-commerce business will drive the stock higher this year. We like the price lower than where it is now but there’s room to consider buying it if you’re less sensitive to price.


Daily Trading Ranges

20 Proprietary Risk Ranges

Daily Trading Ranges is designed to help you understand where you’re buying and selling within the risk range and help you make better sales at the top end of the range and purchases at the low end.

Does Size Matter?

Earlier in the week, we took a look at the year to date performance across the consumer staples sector, looking for explanations related to short interest, 2012 performance and beta.  Today we round out our discussion of quant factors with a look at market capitalization versus YTD stock performance.  In much the same fashion as our prior attempt to identify the drivers of performance, our examination of market capitalization fell short.

 

Does Size Matter? - Market Cap vs. Performance

 

We even took a look at the space absent the big uglies (market cap >$75 billion>, but the data didn't provide any incremental insight.

 

Does Size Matter? - Market Cap less than 75

 

While these factors have been valuable indicators of outperformance in the broader market, consumer staples appears to be marching to its own beat.  We remain convinced that the consumer staples sector is seeing inflows as investors seek to participate in a market rally they may not necessarily believe.  We believe it, and see better ways to participate than with a consumer staples sector that is seeing historical valuation levels getting stretched.

 

Kind regards,

 

Rob

 

Robert  Campagnino

Managing Director

HEDGEYE RISK MANAGEMENT, LLC

E:

P:

 

Matt Hedrick

Senior Analyst 

 

 

 


CAT: Global Dealer Sales

Caterpillar’s (CAT) dealer sales mirror that of durable goods in that both have been steadily weakening since Q2 of 2011. We don’t expect a rebound in CAT’s sales in the near-term as dealers and various corporations focus on reducing inventory and shift away from resource industries. Combined with a decline in mining capital expenditures over the last few quarters, CAT has its work cut out for the first half of 2013.

 

CAT: Global Dealer Sales - CAT Dealers


Still Bullish: SP500 Levels, Refreshed

Takeaway: Bullish is as bullish does.

POSITIONS: 11 LONGS, 6 SHORTS @Hedgeye

 

Bullish is as bullish does. And I think we have been very clear on the why. Employment #GrowthStabilizing now has to deliver on Friday.

 

Across our core risk management durations, here are the lines that matter to me most:

 

  1. Immediate-term TRADE overbought = 1511
  2. Immediate-term TRADE support = 1489
  3. Intermediate-term TREND support = 1434

 

That’s why I bought and covered on both yesterday and today’s red market opens. Our quantitative risk factoring supported those decisions.

 

It’s just our process.

KM

 

Keith R. McCullough
Chief Executive Officer

 

Still Bullish: SP500 Levels, Refreshed - SPX


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