The Pullback Has Arrived

Indie Research

Stocks continued their downward ways, hurt by lackluster economic data and worries about a banking crisis in Spain. At this time, we think it is pretty safe to say that the market is in the midst of the pullback we previously predicted, and we would anticipate stocks to continue their downward trend. However, we also think this is now a good time to start looking to build positions, gently dollar-cost averaging into the market weakness.

The Gold and Silver Stocks Index was the top performing tickerspy Index on the day, led by Crystallex International (Pink Sheets: CRYFQ) with a 11% gain. The Chinese Solar Stocks Index was the day's worst performing tickerspy Index, with JA Solar Holdings (JASO - News) down -15%.

Stocks fell on the day, with the Dow nosediving -156 points to 12,442. The S&P lost -20 points to 1,305, while the Nasdaq sunk -60 points to 2,814. Oil edged -25 cents lower to $92.56 a barrel, while gold climbed $38.30 to $1,574.90 an ounce.

In economic news, the Federal Reserve Bank of Philadelphia said its manufacturing index fell to -5.8 in May from 8.5 in April. Economists had expected a reading of 10.0. Readings below zero indicate contraction. Elsewhere, the Conference Board said its index of leading economic indicators dropped -0.1% in April to 95.5 following a 0.3% increase in March and a 0.7% rise in February. Economists had expected a 0.1% increase in April. The number of weekly jobless claims, meanwhile, came in at 370,000, which matched the previous week's reading. Economists were expecting a decline to 367,000 new claims.

In earnings news, shares of discount retailer Dollar Tree (DLTR - News) plunged -6.1% after the company forecast fiscal second-quarter EPS of 87-93 cents, below the 95 cents analysts were expecting. The company forecast a full-year profit of $4.74-$4.94 on revenue of $7.33-$7.46 billion. Dollar Tree expects low- to mid-single-digit same-store sales growth. In its fiscal first quarter, Dollar Tree earned $116.1 million, or $1.00 per share, compared with $101 million, or 82 cents per share, a year earlier as sales rose to $1.72 billion from $1.55 billion. Same-store sales increased 5.6%. Analysts had expected EPS of 97 cents on revenue of $1.69 billion.

Shares of retailer Limited Brands (LTD - News), the owner of Victoria's Secret and Bath & Body Works, slipped -4.4% after the company said its fiscal first-quarter profit fell to $124.6 million, or 41 cents per share, compared with $165.2 million, or 40 cents per share, a year earlier. Revenue dropped to $2.15 billion from $2.22 billion. Both the EPS and revenue numbers matched Wall Street estimates. Limited forecast a full-year profit of $2.63-$2.83 a share, bracketing the $2.82 consensus. Nine pros counted Limited Brands among their top holdings at the end of Q1 and nearly 200 tickerspy members own the stock in their portfolios.

Embattled retailer Sears Holdings (SHLD - News) posted a fiscal first-quarter profit of $189 million, or $1.78 per share, compared with a year-earlier loss of -$170 million, or -$1.58 per share. On an adjusted basis, Sears lost -31 cents, better than the loss of the -67 cents analysts expected. Revenue fell -3% to $9.27 billion, but that beat the $9.26 billion analysts expected. Shares of Sears rose 3.1%.

Offprice apparel retailer Ross Stores (ROST - News) said its fiscal first-quarter profit climbed to $208.6 million, or 93 cents per share, from $173 million, or a split-adjusted 74 cents per share, a year earlier. Sales jumped to $2.36 billion from $2.07 billion, while same-store sales increased 9%. Analysts had expected a profit of 93 cents per share on $2.34 billion in sales. For the current, quarter Ross expects EPS of 72-75 cents on same-store sales growth of 3-4%. Analysts were expecting a profit of 75 cents a share. The company also raised its full-year guidance to $3.26-$3.37 a share from $3.12-$3.27. Analysts were expecting EPS of $3.37. Shares of Ross fell -2.5%. Nearly 30 pros held Ross Stores in their portfolios at the end of Q1 and nearly 200 tickerspy members own the stock in their portfolios.

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