2 Retail Stocks Ready for a Santa Claus Rally

The Federal Reserve met broad expectations by reducing its interest rate hike to 50 bps this month. However, its emphasis on taming inflation further by raising interest rates in the foreseeable future has dampened the optimism that had kept markets buoyant in the run-up to yesterday’s announcement.

However, in the run-up to year-end festivities, consumer spending is also set to increase, thereby adding more wind to the sails of businesses that have been under pressure by aggressive interest rate hikes and other macroeconomic headwinds for a greater part of the year.

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Hence, it could be wise to buy The TJX Companies, Inc. (TJX) and Five Below, Inc. (FIVE) to capitalize on increased consumer spending during the holidays. These stocks show strong trends.

The TJX Companies, Inc. (TJX)

TJX is an off-price apparel and home fashion retailer in the United States and internationally. The company’s operating segments are Marmaxx; HomeGoods; TJX Canada; and TJX International.

TJX’s revenue has exhibited a 6.6% CAGR over the past three years. During the same time horizon, the company’s EBITDA and net income have also grown at 2% and 2.8% CAGRs, respectively.

During the nine months of the fiscal year ended October 29, 2022, TJX’s net sales increased 2.1% year-over-year to $35.42 billion. During the same period, the company’s net income increased 5% and 8.3% year-over-year to $2.46 billion and $2.08, respectively.

Analysts expect TJX’s revenue and EPS for fiscal 2023 to increase 2% and 9.3% year-over-year to $49.51 billion and $3.12, respectively. The company has surpassed consensus EPS estimates in three of the trailing four quarters.

Owing to its strong performance and solid growth prospects, TJX is currently commanding a premium valuation compared to its peers. In terms of forward P/E, TJX is currently trading at 25.41x compared to the industry average of 12.88x. Also, its forward EV/EBITDA multiple of 17.26 is higher than the industry average of 9.15. Continue reading "2 Retail Stocks Ready for a Santa Claus Rally"

Is The Dollar Going To Steal The Santa Claus Rally?

Top metals failed to keep on the bullish track set earlier. A heavy-duty dollar reinforced by historically high inflation, earlier tapering expectations, and a turn to safety puts pressure on precious metals.

Let us see what is currently happening with the Dollar Index in the daily chart below.


The well-known "Double Bottom" (blue) pattern has emerged in the summer. It is a textbook case as all stages went precisely as they should appear.

The focus was on the breakup of the so-called "Neckline" (black horizontal line) located at the top between the two bottoms at $93.44. The first attempt to crack that level occurred at the end of August, but it failed. After a small retracement, the second attempt at the end of September succeeded in breaking out. The impulse was so strong that the price overshot the Neckline with a big margin to hit the fresh one-year top of $94.5. Continue reading "Is The Dollar Going To Steal The Santa Claus Rally?"

Santa Claus Rally Kicks Off For Gold

The year is approaching a sunset. It is the right time for precious metals to get ready for a Santa Claus visit to take them for a ride to the sky. One of the metals has already been in the game; I am talking about gold.

Daily Gold Chart

In October, I enriched the bullish view with the newly spotted “Diamond” reversal pattern. Most of you confirmed that you see this pattern. It is still good, as the invalidation level was not touched. Continue reading "Santa Claus Rally Kicks Off For Gold"

Silver Update: 1980s Vs. The 2010s

Silver surprised us with a strong Santa Claus Rally. It woke up like an ancient volcano and with a booming eruption. Before that, we proclaimed silver to be dormant compared to a vigorous rival, gold.

Everything changed at the end of 2018 as gold gained 10% from the lows and a weak silver tried to catch up to make the same profit at the very end. Bargain hunters couldn’t pass by this clear market distortion and took their chance to book a nice profit of around 4%.

In my earlier post I updated the medium term gold chart for you. Last time I updated the big chart of silver in October, which was titled dramatically “Fly Or Die” as submissive behavior of silver was leaving less and less hope for investors.

This time I am going to update the silver chart, but using a different approach. You are already familiar with it as I used historical clones with gold and silver before. The latter one was successful. This time it will be extended as I will use two clones instead of one from different historical periods so you can choose.

Let’s start with the distant one.

Chart 1. Silver Futures Monthly: Echo Of the 80s

Silver Update
Chart courtesy of tradingview.com

This chart was built in a high resolution, and I recommend you to click on it to open in a new window to see a larger image in details, especially in the right clone (orange box). Continue reading "Silver Update: 1980s Vs. The 2010s"

Gold & Silver: US Dollar Could Spoil Santa Claus Rally

Here we are on the final track of the year, and investors hope for the traditional Santa Claus rally in the precious metals sector. This euphoria of the anticipated strength based on the current move up could be spoiled if this pattern would emerge in the US dollar index (DXY).

Chart 1. US Dollar Index Daily: Triangle

US Dollar
Chart courtesy of tradingview.com

The disappointing data of US non-farm payrolls released last Friday couldn’t damage the US dollar as it kept above the former trough established on the 4th of December at 96.30. The first reaction in the market was a USD sell-off against all major currencies, but it was short-lived, and none of the former extremes were breached. This made me focus on the Dollar Index chart to see if there is some pattern or trading setup has been shaping amid this unusual market behavior. Continue reading "Gold & Silver: US Dollar Could Spoil Santa Claus Rally"