In this case, it’s two long ideas for investors.
Position: 11 Longs, 6 Shorts
Back on 7/1, with the index overbought and the setup for pro-growth exposure at the beginning of July beginning to look a lot like it did back in March, we issued a fresh Sell Signal at 1208 on the Russell. (Selling: Russell Levels, Refreshed)
After a big drop Monday, the Russell tested its Intermediate-Term TREND line for two sessions before breaking through on the open.
Looking across both sectors and asset classes, prices are telling a cohesive, slow-growth story:
REITs and Gold Miners outperforming vs. consumption driven sectors (consumer retail getting crushed) as our cyclical bearish call on U.S. consumption growth continues to unfold in sector divergences.
Tomorrow in our Q3 Macro Themes call (ping for access) we’ll outline our bearish thesis on the U.S. consumer into in the back half of the year. We continue to like Gold, Treasuries, and defensive sectors (XLU, REITs, XLE) in the face of further #Dollar Devaluation crushing already thin consumer margins. #Q3Slowing will be our first theme in the deck on tomorrow’s call.
Our core risk management levels on the RTY, with their respective durations, are as follows:
In other words, after an expedited -4% slide from the 1208 overbought signal, we got most of the correction we we’re looking for. From here, we’ll remain better sellers of consumer centric, small-cap growth style factors on strength.
Hedgeye Risk Management CEO Keith McCullough sat down with Fox Business’ Maria Bartiromo for the hour on “Opening Bell” this morning and explained why he’s cautious on the markets, his concerns about stagflation, and why he continues to like gold.
Get The Macro Show and the Early Look now for only $29.95/month – a savings of 57% – with the Hedgeye Student Discount! In addition to those daily macro insights, you'll receive exclusive content tailor-made to augment what you learn in the classroom. Must be a current college or university student to qualify.
We look forward to continuing our Speaker Series on e-cigarettes and e-vapor with John J. Wiesehan, Jr., CEO of the Charlotte based company, Ballantyne Brands, LLC. The conference call will be held on Wednesday, July 16th at 11:00am EDT.
Ballantyne Brands is a leading private manufacturer with the third largest market share in the U.S. (xAOC channel) with such e-cig brands as Mistic and Neo and personal vaporizer Haus.
Is the consumer switching to an alternative vaping product, and why? Mr. Wiesehan, Jr. will offer his latest insights and expertise to Hedgeye's ongoing research on the e-cigarette/e-vapor category.
KEY CALL TOPICS WILL INCLUDE
LO, MO, PM, RAI, ECIG, VPCO, BTI
ABOUT JOHN J. WIESEHAN, JR.
John J. Wiesehan, Jr. is currently the CEO of Ballantyne Brands, LLC. A graduate of Lindenwood University in Saint Charles, Missouri, John spent time at General Electric as the Worldwide Operations Manager. From General Electric, he moved to Woods Industries as Vice President in the Sales and Marketing sector. In October 2012, John joined Ballantyne Brands, LLC located in North Carolina and became CEO.
Takeaway: FDO - little faith in core consumer. Adi releases 2nd fitness tracker...doubt we see a 3rd. Tough week for NKE soccer. RonJon speaks.
EVENTS TO WATCH
FDO - 3Q14 Earnings
Takeaway: Slight beat on the top line driven by a better than expected comp offset by margin pressure due to sales mix (consumables penetration up 73bps), fixed cost deleverage, and increased ad spend led to the $0.04 EPS miss. We still have very little faith in FDO's core consumer.
AdiBok - Adidas Gets Smart
"Adidas unveiled Fit Smart, a fitness-training product worn on the wrist, at the Wearable Technologies Conference in San Francisco today...Fit Smart measures heart rate, calories, pace, distance and stride to calculate workout intensity."
"Fit Smart, which retails for $199, will be released in late August exclusively at Best Buy and Bestbuy.com, and then on Adidas.com."
Takeaway: Interesting move here by Adi given the moves made by its competition over the past 3-6 months. NKE appears to be walking away from fitness tracking hardware - choosing instead to outsource the design to Apple. UA won't be releasing another iteration of its Armour39 fitness tracker, deciding to partner with best-in-class products already on the market. This is the 2nd stab Adi has taken at the smartwatch/ fitness tracker, and our guess is that we won't see a 3rd. Sports brands have tried and failed repeatedly to establish a market presence in this growing category. Best to leave hardware to the Apples, FitBits and Jawbones of the world.
AdiBok, NKE - Argentina Win Hands Adidas World Cup Win Before Final
"Argentina, sponsored by Adidas AG, triumphed on penalty kicks in Sao Paulo to eliminate a Dutch side outfitted by Nike Inc. of the U.S. In the final, it will face fellow Adidas-backed team Germany, which defeated Nike-supported Brazil 7-1 on July 8. The Herzogenaurach, Germany-based company also outfitted the Spanish team that won the last World Cup in 2010."
Takeaway: Tough week for NKE soccer. First the Brazil disaster, then ManU, and now an all Adi final.
JCP - Ron Johnson: ‘I was a terrible fit for J.C. Penney’
ZQK - Quiksilver Announces Additional Licensing Agreements
DSW - New DSW Designer Shoe Warehouse Stores Open in Canada
AAP - American Apparel Signs Support Agreement with Standard General
LE - Lands’ End deploys Fit Predictor to help online shoppers get best fit
BEBE - Apparel retailer Bebe stores revamps management board
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.