Falling Oil Catalyst for Big Box Retailers

Welcome to Karpel’s Corner. This is where I throw out my thoughts on the markets and share some of my favorite strategies. I keep it market-focused, and never miss an opportunity to teach trading strategies and commentate on the latest trends affecting the financial markets. Hope you enjoy today’s post!

Big box retailers, Wal-Mart ($WMT), Costco ($COST), and Target ($TGT) were lagging the upside for all of 2013 and most of 2014. That is, until today.

A major catalyst is lower energy prices. With prices at the pump being lower, consumers are now getting out and about. I heard a stat today that for every .01 drop in gas price there is one billion pumped into the GDP. This means that consumer could potentially be spending more into the holiday season.

The retailer will also benefit because their costs are lower, improving their margins. Transportation ($IYT) is a beneficiary as well, showing early leadership.

I do not expect that this will last past the holiday season and I also think that there will be greater amount volatility in the next month. Remember to scale into positions wisely.

Have a great weekend and see you next time at the Corner!