Back to School Retail Dumpster Diving

There is often much ballyhoo associated with the various gaps we see during earnings season after a given report. 

Oftentimes, the gaps do not amount to much technically, at least initially, as they are often a function of a knee-jerk reaction to some type of surprise from the earnings numbers and/or conference call. Hence, our focus for Members is, first and foremost, managing and defining risk during earnings season rather than overreacting to a given report in a sector, for example. 

But when an earnings reaction occurs are a rather defined technical point of reference, we certainly want to take notice. 

In the case of  Guess?, Inc., we have an earnings beat from them pre-market. As you can see on the GES daily chart, below, the retail play famous for watches snapped up and away from its 200-day moving  average. And just like most retail plays, GES has been operating below a declining 200-day for at least the last few months if not years. 

Therefore, the gap this morning is not some random, one-off event. Instead, it appears to be a more meaningful event, technically, given where it occurred--The 200-day now functions as support into a major event for the firm (earnings). 

If more retail plays make this sort of progress, the AMZN-Eats-All cries may have marked an intermediate-term low to the sector earlier this summer, and it may very well transcend a simple back-to-school bump for retail stocks this week.