After O’Reilly Auto Parts lowered its second quarter sales and earnings guidance automotive replacement parts and accessories retailers dropped significantly. By the end of the day O’Reilly was down over 14% and Autozone dropped 4.5%. This is one of the largest drops for O’Reilly in the last few years as the automotive parts stocks have performed very well recently. In fact, the drop in Autozone pushes the stock down to its 200 day moving average for the first time in 2012.
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Auto Parts and Dollar Stores Struggle on June 27th
On Wednesday, June 27th, 2012 some of the retail leaders from earlier in the year had a difficult day. Dollar Tree traded down almost 4% after the stock performed a two for one split. Unlike Autozone and O’Reilly, Dollar Tree is still well above its 50 day moving average. The stock tested its 20 day moving average but this important short term indicator held as support today. Many people who are struggling with finances continue to shop at these low cost retailers but a better economy could hurt profits of these companies.
In the last several years Visa secured credit cards have become quite popular as Americans are looking for better financial options. It seems to be the case that there is a place for the high end retailer and the low end retailer. Any retailer that is stuck somewhere in the middle is truly struggling in 2012. It could be the case that some of these “middle men” see stellar gains over the next few months as they have lagged much of the last two years.
S&P 500 Finishes Day Up 0.9%
Even though retail names lagged all day the overall S&P 500 performed quite well. The S&P 500 outpaced both the tech heavy NASDAQ and the Dow Jones Industrial Average. The S&P is currently right below its 50 day moving average. It is important to note that the 50 day moving average is moving lower. If there is a strong move higher in heavy volume over the next few days the major index might get back into a strong bull market technical pattern.
Energy and utility stocks performed very well on Wednesday, June 27th. Both sectors were up about 1.25%. Even though there was a move higher in energy stocks the XLE is still below its 50 day and 200 day moving average. It will take several positive days to get the energy stocks back above the 200 day moving average. There are several areas of resistance coming up so positive news will be needed.