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    MARKET EDGES

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Today's late-day rally did wonders for apparel/footwear retail. The sell-off in the CRB and supportive comments from the Fed came at a good time for the group - which is trying to figure out how to be positioned in advance of same store sales this Thursday. I'm not one for predicting the primal reaction of this heavily-shorted group when numbers come out, but I can analyze the facts. The facts are not encouraging.

One of the most notable is in looking at the RTH versus the S&P in the periods leading up to sales day over the past 12 months. There are three key takeaways.

1) The stability of the RTH this month has been surprising. There has not been a month in over a year where we have not seen anything less than a 2% relative performance gap from one sales day to the next. This time, we are sitting at zero.

2) With everyone freaking out about the consumer, I'd have thought the market would be discounting more bad news. Maybe the market is looking at the earnings revision chart I posted earlier today and is assuming that most revisions have already passed. They probably did not read the second part of my posting that talked about earnings expectations still being 1,000bp+ too high.

3) The May comp reported 5 weeks ago came in at 3.1% based on my math. While little changed sequentially, this represented a 220bp improvement in the 2-year run rate. It just so happens that to maintain this 2-year rate, we need to see a 3% comp out of the industry this Thursday. Let's hope that the consumer is spending more than recent newsflow suggests.

The Exhibit shows the RTH relative to the S&P 500. Recent stability is very surprising.