Despite a slew of weaker-than-expected data out of Europe overnight and additionally weak factory orders domestically, markets are sharply higher. Before today’s open, data surfaced that showed unemployment in the eurozone hit a new all-time high, and PMI data in select countries was very weak and below expectations. Buyers continue to step in and buy risk, as equities are near their highs of the day. Stocks are being led by the Nasdaq, up over 1% on the day, with the S&P 500 up 0.6% and the Russell 2000 up a meager 0.2%. Bonds are lower on the day, down 0.5%, while metals are getting hammered. Currently, gold is off 1.5%, silver is 2.7% lower, and miners are 3.5% below yesterday’s closing prices.
CHART OF THE DAY
Ross Stores (ROST) – the retailer has rallied largely with other retail names and the overall market so far in 2013, up about 10% for the year. However, despite its recent strength, ROST is only up about 2% over the past 52 weeks as the broad market has soared. The equity is running its 160-day moving average, which has proven to be significant many times in the past. With the trendline sloping downward here, it could act as resistance going forward.
Despite its lackluster price action, sentiment toward ROST remains rosy. Currently 10 of the 20 analysts covering ROST have it rated a “buy,” with the other 10 analysts sitting on a “hold” rating. Additionally, only about 1% of ROST’s float is sold short, creating the potential for new short positions to enter the market. I like a bearish entry here with a stop on a close above 61.50. I would initially target a move down to 56, with 52 being a stretch target.
WHAT I’M EXPECTING
There’s no reason to try and pick a top here, so I’m playing this for a continued grind higher. Sentiment continues to be skeptical toward the overall market, and the pain trades looks to be higher from here.