Trading Diary: Investors dying of boredom in Tuesday markets

Retail malaise, fear of August correction, Dick's Sporting Goods and AWOL summer vacationing traders and investors make for a dull day, as markets remain confused and lack conviction.

This Moscow street vendor seems to be about as bored with old Communists as we are with the capitalistic trading on Wall Street today. (Via Wikipedia)

WASHINGTON, August 15, 2017 – We’re experiencing yet another day of summer stock market doldrums Tuesday. Negative crosscurrents are largely overcoming generally decent corporate profit numbers as Q2 earnings numbers dribble out. Odd.

As we noted in our companion column, retail continues to get disproportionately spooked by Amazon’s (symbol: AMZN) entry into the major appliance sales world via its agreement with Sears (SHLD) to effectively sell and deliver the latter’s generally well-regarded Kenmore-branded appliances on its vast retail website.

Read also: Retail sings the blues, Tuesday stocks stuck in the red zone

An example of the weirdness: After reporting spectacular sales numbers and profits before this morning’s opening bell, Home Depot (HD) shares tanked. HD shares have remained underwater and currently stand at $149.55 per share, off nearly 3 percent on the day. Likely profit-taking. But still…

Trading Diary

We hold a small position in Home Depot shares and actually bought a few more on today’s dip. In an uncertain 2017 housing market, potential buyers appear to be holding back when possible and improving their own homes instead of lighting out for the territories. This can only be good for Home Depot, and we think they’ll make or even exceed their own numbers to some extent.

Yes, the Amazon-Sears agreement could erode HD’s major appliance sales a bit (perhaps). But HD – which CNBC’s Jim Cramer aptly calls “Home Despot” – sells a whole heck of a lot more stuff than just appliances, for Pete’s sake. No reason not to pick up a few shares of this robust and reliable retailer on this kind of sell-on-the-news nonsense.

Ditto our other retail holding in Dollar Tree (DLTR), an amazingly volatile stock that requires some patience to hold. DLTR is down today as well, in sympathy (along with HD and others) with the spectacularly lousy quarterly report unveiled by Dick’s Sporting Goods (DKS). Traders instantly and viciously punished Dick’s Tuesday, mercilessly pummeling its shares from the very start.

As of 2:50 p.m., DKS shares are trading at about $27.36 per share, off a sickening $7.55 as we write this, a spectacular 21.6 percent loss from yesterday’s closing price. We’ll be avoiding Dick’s shares today, even on this substantial dip. Something’s going wrong. But since we don’t know what it is, we’ll stay clear.

We’d like to get back into some tech shares after their severe early August punishment, which drove them down to prices so low that they’re beginning to look attractive again. We’re already in Idaho-based chipmaker Micron Technology (MU), which continues to look great. It’s been a bit weak of late, so we picked up some more.

Lam Research (LRCX), another chip-etc. manufacturer, also looks good, although it’s pretty expensive in dollar terms, at nearly $160 per share today. It’s up nearly 1 percent on the day, though, so we’re going to watch it, not chase it.

We’re also looking to add a bit to positions we already in a few Schwab ETFs. But, as averages remain wobbly, we’ll be careful about our entry points.

On the whole, aside from a little nervous position shuffling here and there if at all, days like this, where uncertainty reigns, are best left alone for the most part, whether the tendency is to buy or to sell. Just not enough information.

We’ll return with our Trading Diary column this week as the situation warrants.

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