What I considered to be the 6th day of the elongated holiday weekend was about as exciting as watching snow melt, which I can assure you was not occurring around here. The Standard & Poor’s 500 (SPX) traded in a six point range or about 1/3%. Historically, the average daily range is close to 1.5% As I promised, I cut back on exposure to discretionary retail yesterday. Five Below (FIVE) which appears to be in the paws of the bears was removed from our portfolios.
The M&Ms report earnings today – McDonald’s (MCD) in the morning and Microsoft (MSFT) after the market close. Expectations are low for MCD as the company continues to struggle. After holding the stock, quite successfully for a decade, I have MCD on my marked for sale list, as I wrote in an article for Marketwatch last month. If management continues to march to its old tune, which will be quite evident in today’s report, then, sentiment and nostalgia aside, I will use the stock as a source of cash.
Microsoft is not a stock I own but if you do, you should mark it for sale as well. The company has no management succession plan and there are not many takers for the CEO role. Windows 8 is such a disaster that in the last few days Hewlett-Packard (HPQ) announced that the computer manufacturer is bringing back Windows 7. This would be like Chevrolet dealers asking General Motors (GM) to bring back the 1964 Impala instead of the 2014 model. Come to think of it, I would not mind a good old 1964 Chevy Impala compared to the 2014 version. Recently, Seton Hall reimaged my computer to Windows 8. I reacted like any other self-respecting trader would do and said to get the $%&#! Windows 8 off my computer. As self-respecting technology people do, they told us traders, “don’t worry, you will get used to it.” Well after about a month the university, without my urging put Windows 7 back on the computers. Enough said for Microsoft.
After the market closed yesterday; Buffalo Wild Wings (BWLD) spiked up close to 9 points in after-hours trading. There was no news to drive the stock higher. Then a little while later, that trade disappeared. It must have been an errant trade that was subsequently cancelled.
Weekly claims and existing home data will be released in the morning. However, I do not think that anything will spook or spark the market. Overnight manufacturing data from China which was on the soft side may create some softness at the open. However, I expect that the markets will continue on the treadmill it has been stuck on since Christmas for a little while longer.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long BWLD and MCD — although positions can change at any time.
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