STELLAR RETAIL SALES BUT TARGET EXPOSES THE CRACKS

Twitter
LinkedIn
Facebook

By Nigam Arora & Dr. Natasha Arora

To gain an edge, this is what you need to know today.

Stellar Retail Sales

Please click here for a chart of S&P 500 ETF (SPY) which represents the benchmark stock market index S&P 500 (SPX).

Note the following:

  • The chart shows that the market is consolidating below the low band of the upper support/resistance zone.
  • The chart shows that RSI is overbought but the pattern is such that it can go either way.
  • The U.S. economy is about 70% consumer based.  For this reason, prudent investors pay close attention to retail sales.  Retail sales were stellar.  Here are the details:
    • October Retail Sales came at 1.3% vs. 0.9% consensus.
    • Retail Sales ex-auto came at 1.3% vs. 0.6% consensus.
  • In spite of strong sales and strong earnings from Walmart  (WMT) and Home Depot (HD) yesterday as well as Lowe’s (LOW) today, Target (TGT) earnings are exposing cracks in consumer spending.
  • Here are the key points from Target’s earnings:
    • Consumers are pulling back from discretionary purchases.
    • Consumers are showing signs of stress.
    • The sales in the back half of October were even softer than the first half.
    • Earnings were $1.54 vs. $2.18 consensus.
    • The company is guiding lower.
    • Target stock is down 15.6% as of this writing in the pre-market.
  • The difference between strong earnings from Walmart and poor earnings from Target is two fold.
    • Walmart is geared towards the lower end consumer, but Target has higher prices and is geared towards the more affluent consumer.
    • Target is more exposed to discretionary purchases.
  • Industrial Production came at -0.1% vs. 0.0% consensus. Capacity Utilization came at 79.9% vs. 80.3% consensus.
  • Micron (MU), a maker of semiconductor memory, is predicting weakness in memory chips.  
See also  POTENTIAL CHINA OPPORTUNITY AHEAD, POWELL SPEECH AND JOBS REPORT

Poland

Markets are breathing a sigh of relief on NATO saying that the missile that hit Poland was likely an air defense missile from Ukraine.

Momo Crowd And Smart Money In Stocks

The momo crowd is 🔒 (To see the locked content, please take a 30 day free trial) stocks in the early trade.  Smart money is 🔒 in the early trade.

Gold

The momo crowd is 🔒 gold in the early trade.  Smart money is 🔒 in the early trade.

For longer-term, please see gold and silver ratings.

Oil

API reported a draw of 5.835M barrels.  However, oil is falling on the report that the missile that hit Poland was not Russian.

The momo crowd is 🔒 oil in the early trade.  Smart money is 🔒 in the early trade.

For longer-term, please see oil ratings.

Bitcoin

Bitcoin is under pressure on Genesis, a crypto broker, stopping withdrawals from its lending arm.

Markets

Our very, very short-term early stock market indicator is 🔒.  This indicator, with a great track record, is popular among long term investors to stay in tune with the market and among short term traders to independently undertake quick trades.

Interest rates are ticking down, and bonds are ticking up.

The dollar is weaker.

Trading futures is not recommended for most investors. The purpose of providing this information is to give an indication of the premarket activity that usually guides the activity when the market opens.

Gold futures are at $1783, silver futures are at $21.75, and oil futures are at $85.41.

See also  STRENGTH IN SERVICES STOPS MOMO SEASONAL RALLY

S&P 500 futures resistance levels are 4000, 4200 and 4318: support levels are 3950, 3860 and 3770.

 futures are down 67 points.

Protection Band And What To Do Now

It is important for investors to look ahead and not in the rearview mirror.

Consider continuing to hold existing positions. Based on individual risk preference, consider holding 🔒 in cash or treasury bills or allocated to short-term tactical trades; and short to medium-term hedges of 🔒, and short term hedges of 🔒. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection band by adding cash to hedges.  The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive.  If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash.  When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks.  High beta stocks are the ones that move more than the market.

To take a free 30-day trial to paid services to gain access to more opportunities, please click here.

Markets can generate substantial wealth for knowledgeable investors. NOW YOU TOO CAN ALSO SPECTACULARLY SUCCEED AT MEETING YOUR GOALS WITH THE HELP OF THE ARORA REPORT. You are receiving less than 2% of the content from our paid services. …TO RECEIVE REMAINING 98% INCLUDING MANY ATTRACTIVE INVESTMENT OPPORTUNITIES, TAKE A FREE
TRIAL TO PAID SERVICES.

See also  INVESTORS LONG THE WRONG GOLD, FED’S WALLER THROWS COLD WATER ON THE STOCK MARKET RALLY

Please click here to take advantage of a FREE 30 day trial.

Nigam Arora

Nigam Arora

Nigam Arora is known for his accurate stock market calls. Nigam is a distinguished master of the macro. He is a popular columnist with over 100 million page views, an engineer, and nuclear physicist by background. Nigam has founded two Inc. 500 fastest growing companies and has been involved in over 50 entrepreneurial ventures. He is the developer of Theory ZYX of Successful Change Management and is the author of the book on Theory ZYX, as well as the developer of the ZYX Change Method for Investing.

Dr. Natasha Arora

Dr. Natasha Arora

Dr. Natasha Arora has significant expertise in investment analysis especially biotech, healthcare, and technology. Natasha is a graduate of Harvard Medical School followed by a postdoc at MIT. She has published several peer reviewed research papers in top science journals.

Subscribe to 'Generate Wealth'

Free Forever

More To Explore

30 Day Free Trial

Cancel within 30 days and you owe nothing

When you take a FREE 30 day trial, you get access to powerful techniques used by billionaires and hedge funds to grow richer. You can continue to use these powerful techniques to grow richer even if you cancel your subscription. You come out ahead by subscribing no matter how you look at it.

Do you want to gain an edge in the markets? Join thousands of your fellow investors and money managers to subscribe to Generate Wealth newsletter.

FREE FOREVER

Follow The Most Accurate Stock Market Analysis

Unrivaled Insights
In Bull and Bear Markets

Generate Wealth Newsletter
Free Forever

Generate Wealth Newsletter
Free Forever