Holiday Sales, Housing Recovery Are Key to Recovery

NEW YORK (TheStreet) -- Recent readings on consumer confidence have been weaker than expected and Wednesday we'll get the Retail Sales for October which are expected to show a rise of 0.3%. Next week we get the November reading of the Conference Board's Consumer Confidence index, which is expected to rise slightly to 73.0, still well below the 90 to 110 neutral range.

Meanwhile the Market Vectors Retail ETF ( RTH) ($60.61) traded to a new multi-year high at $61.31 on Friday and is overbought on its daily chart and well above its 50-day and 200-day simple moving averages at $57.19 and $52.78. My weekly value level is $60.42 with a monthly risky level at $61.34. The performance of this ETF seems to point to better than expected holiday sales, while a report from Morgan Stanley projects that this year's holiday season will be the weakest since 2008.

This week we present my buy-and-trade strategies for 18 retailers pre-earnings.

On Monday I wrote Best Buy, Home Depot Headline Tuesday's Earnings and in this post I profiled two benchmark retailers that reported results this morning.

Best Buy ( BBY) ($43.56) beat estimates by 6 cents earning 18 cents a share. The buy rated retailer of electronics and appliances also beat on the revenue earning $9.36 billion. Same store sales rose just 0.3% less than half 0.7% expectations. The stock fell as much as 8% in premarket trading with trades below its 50-day SMA at $40.48. This stock set a multi-year high at $44.66 on Thursday.

Home Depot ( HD) ($79.67) beat estimates by 5 cents earning 95 cents a share. The buy rated retailer of home improvement products reported revenue rose 7% to $19.47 billion and that U.S. same store sales increased by 8.2%. Home Depot also raised its full year guidance. As a result of this strong earnings report the stock popped above its May 22 multi-year high at $81.56 in premarket trading with its monthly risky level at $83.59.

Earlier today I profiled three retailers in Deere, Lowes Headline Wednesday's Earnings that report tomorrow including Lowes ( LOW) ($50.89) which had been out-performing rival Home Depot, setting a multi-year high at $52.08 on Friday.

By the end of the week we will have an excellent read on potential holiday sales from 18 retailers.

Courtesy of MetaStock Xenith

According to the Florida Retail Federation holiday sales in the Sunshine State are projected to rise by 4.5% out-pacing a national rise of 3% to 4%. The reason cited is an above normal boom in visitors this year.

The National Association of Home Builders Housing Market Index for November came in at 54, which is unchanged from a downward-revised index in October.

The HMI has been above 50 for six consecutive months, which indicates that homebuilders think that the market for single family homes is 'good'. The NAHB indicates that Congress is holding back the housing market due to the pending decisions on the budget, taxes, government spending and the costs related to the Affordable Care Act. In addition, builders still face rising construction costs and low appraisals.

Tomorrow we get a read on Existing Home Sales for October and the projected annual pace is expected to be 5.3 million. This will be followed by Housing Starts for October next Tuesday and the projected annual rate for this release is 925,000 units. Due to the partial government shutdown we did not get the reading for Housing Starts in September. The NAHB estimated that the September pace for single-family homes was 625,000. It would not be surprising to see these numbers below these expectations.

The Housing Index ( HGX) (182.93) is showing that the housing bubble may be re-inflating as this index tries to have a daily close above its 200-day SMA at 184.32. The 2013 high at 210.01 was set on May 20 with the 2013 low set at 164.03 on Aug. 15. Weekly and semiannual value levels are 181.37 and 180.52 with a monthly pivot at 185.77.

Courtesy of MetaStock Xenith

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Richard Suttmeier is the chief market strategist at AlphaPlus Analytics in addition to ValuEngine.com. He has been a professional in the U.S. Capital Markets since 1972, transferring his engineering skills to the trading and investment world.

Suttmeier has an engineering degree from Georgia Tech and a Master of Science degree from Brooklyn Poly. He began his career in the financial services industry in 1972 trading U.S. Treasury securities in the primary dealer community. He became the first long bond trader for Bache in 1978, and formed the Government Bond Department at LF Rothschild in 1981, helping establish that firm as a primary dealer in 1986. This experience gives him the insights to be an expert on monetary policy, which he features in his newsletters, and market commentary.

Suttmeier's industry licenses include, Series 7 and Registered Principal (Series 24). He has been the Chief Market Strategist for ValuEngine.com since 2008 and often appears on financial TV.

Click here for details on Suttmeier's "Buy and Trade" investment strategy.

Richard Suttmeier can be reached at RSuttmeier@Gmail.com

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