More Fun With Statistics

What is Santa likely to be carrying on his sleigh this year? Once again utilizing Google’s search statistics we can track interest in certain products by looking at how often certain terms are searched for using Google.

The search statistics are provided by Google’s Insight service, data is narrowed down to the United States region only. Data is through December 13 2009.

I will check these search statistics again next week to see if there is any improvement or further deterioration.

(click any image for larger view)

New Cars

New Cars

Toys

Toys

Womens Clothing

Womens Clothing

Mens Clothing

Mens Clothing

iPhone

iPhone

DVD Player

DVD Player

iPod

iPod

Xbox 360

Xbox 360

Nintendo Wii

Nintendo Wii

Flat Screen TV

Flat Screen TV

Observations from this data:

1. New cars have fallen off the cliff after the initial cash for clunker surge.

2. Toys are not being sought at the same rate as last year.

3. Women are always looking for clothes.

4. Men only get new clothes at Christmas.

5. Interest in iPhones has declined.

6. DVD players also weaker.

7. Weaker interest in iPods as well.

8. Video game consoles also showing some weakness in interest.

9. Flat screen TV’s doing fairly well.

A couple more items of interest:

Coupons

Coupons

Shoppers looking for ‘coupons’ at a new high.

And lastly we take a peek inside the bedroom to see how the economy is impacting the ‘whoopee’ time.

Adult Sex Toys

Adult Sex Toys

Looks like less whoopee as a fairly steady downtrend has been in place throughout the recession. What states are still standing firm (no pun intended) with adult sex toy inquiries? The following list are the top 10 demographic regions (states) looking for adult sex toys:

1. Mississippi

2. Florida

3. Pennsylvania

4. Kentucky

5. Arkansas

6. Louisiana

7. Texas

8. Maine

9. Nevada

10. Idaho

Are there any major golf tournaments in those states? Just wondering.




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National Retail Foundation Predicts Bad Holiday Shopping

We know that last years holiday shopping data was terrible after all the numbers were in. Now we get word that the retail foundation is predicting that this year will be even worse than last year.

(US) National Retail Federation (NRF): US consumers plan to spend 3.2% less on holiday shopping this year than a year ago (sales in 2008 declined by 3.4%). [This is 3.2% below last years decline of of 3.4%.. Back to back declines]

- This is the first time that consumer plans to spend less for the holidays since 2002.
- NRF said consumers remain concerned with the economy and unemployment.
- NRF said “American’s are not ready to declare an end to the recession”
- 2/3 of American’s said the economy will impact their holiday plans.
- 70.1% of holiday shoppers plan to shop at discount retailers and 55.8% plan to shop at dept stores.
- The poll included 8,431 respondents.

**Note: On 10/5, the National Retail Federation predicted that holiday retail sales would decline by 1% – USA Today
- If US holiday spending falls this year, it would be the first back-to-back decline since 1992 when the NRF started keeping records. (source: new wires)




Retail Spending – Layaway For Pens and Pencils !

(Hat tip Butch…)

NEW YORK (AP) – To gauge consumers’ strain, look no further than the rows and rows of plastic bags awaiting layaway payments at Kmart. They are filled with back-to-school basics – not just T-shirts and jeans but notebooks, magic markers and pencils.

It is unheard of for layaway rooms to be so packed at back-to-school time and for the packages to include relatively cheap school supplies.

A record number of shoppers, shut off from credit and short on cash, are relying on Kmart’s layaway program to pay for all of their kids’ school needs, said Tom Aiello, a spokesman for Kmart’s parent Sears Holdings Corp. Layaway allows shoppers to pay over time, interest- free, and pick up their merchandise when it’s paid in full.

“It’s a sight. In the past, we would see layaway start to pick up around Halloween” as people get a jump start for Christmas, said David Travis, manager of a Kmart store in Conover, N.C.

Burlington Coat Factory Warehouse Corp. said its layaway business is stronger than a year ago. And e-Layaway.com, which offers online layaway services for about 1,000 merchants, has seenits business double from the same time last year. Customers are setting aside even $25 calculators and $30 backpacks.

The word “layaway” had more than double the interest among U.S. searchers in August 2009 than it had in August 2008, according to Google Insights for Search.

Retailers that don’t offer layaway are seeing financially strapped shoppers keep buying smaller amounts and using more cash than credit to pay.

“It just tells you that consumers have no money – even that $30 backpack is something they can’t afford,” said C. Britt Beemer, chairman of America’s Research group.

Layaway has its roots in the Great Depression. It became passe in the past two decades with the rise of credit cards.

But the recession and financial crisis have caused banks to raise rates, pare credit limits and close accounts. For some consumers, layaway is the best option to budget for purchases.

Buying a little at a time and other signs of stress are casting a dark cloud over the holiday season, which accounts for as much as 40 percent of annual sales for many retailers.

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Macy’s to Cut 7,000 Employees – Cuts Dividend

In a surprise mid-day announcement Macy’s (M) has issued an earnings warning along with job cuts and the reduction of their dividend.

“The steps Macy’s has taken today are a recognition by the company of how bad things are for the economy and for Macy’s,”

Macy’s guides 2009 $0.40-0.55 (EX RESTRUCTURING COSTS) V $1.21 Expected.

CUTS DIVIDEND TO $0.05 FROM $0.1325, CUTTING 2009 SALES EXPECTATIONS, CUTTING 7K JOBS (4% OF WORKFORCE)

- Guides SSS in 2009 to be -6% to -8%

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US Retail Sales – August 13, 2008

 

JULY ADVANCE RETAIL SALES:

0.1% V -0.1%E; LESS AUTOS: 0.4% V 0.5%E

-  Prior Advance Retail Sales revised from 0.1% to 0.3%

-  Prior Less Autos revised from 0.8% to 0.9%

  

Retail Sales 8_13_08

 (click on chart for larger image)

 

Stock Market Summary for February 19th 2008

In my pre market report I discussed that the futures were up with no solid reason to substantiate the advance. And we expected to see the rally fade, and fade it did. The markets inability to hold on to gains reinforces the bear market mentally that is so prevalent in the market. In bear markets rallies are sold, in other words "sell on strength".

One of the reasons we saw the gap open higher this morning was on the thought that Wal-Marts earnings were perhaps showing that the consumer still had a pulse and was on the road to recovery (as how the media reported it). As I pointed out in my pre market report Wal-Marts earnings were nothing great, only in line with their already lowered forecast and they went as far as to provide forward guidance on the lower end of the scale of their previous guidance. Absolutely nothing to get excited about, however the media jumped all over it. The Associated Press reported:

Wal-Mart Expects More Profitable Year After Low-Price Focus Boosts 4th-Qtr Earnings

Defying the gloom that many retailers are feeling, Wal-Mart Stores Inc. expects a more profitable year selling to penny-pinching shoppers after its renewed focus on low prices paid off over the holidays with a 4 percent rise in fourth-quarter profit.

 

But when you dig into the numbers from this morning there was nothing to get excited about. Wal-Mart, just like so many other retailers that have been lowering their forward earnings guidance. So when Wal-Mart came in with earnings ‘in line’ people got excited over nothing more than a company confirming that earnings were just as bad as the company had predicted when they issued guidance last quarter. The media seems to have a very short memory. After the market opened the retail sector (RTH) gapped up at the same time the media was reporting that "all the bad news is now baked into the stocks". "Baked in", a common term you hear on Wall Street which simply means that the price of a stock is already priced at a worst case scenario and not even bad news can keep it down any longer. Well I guess someone took the pie out of the oven too soon because the retail stocks still went lower, even when everyone was saying it was done. The retail sector sold off throughout the day and ended down 1.2%. So much for all the bad news being baked in.. Whenever you hear someone tell you that you need to buy a stock because "the bad news is already baked into the price" you should run, and run fast in the other direction.

The chart below is an intra-day chart of the Retail Holders Index (RTH) for today.

rth intraday

 

 

 

 

 

 

 

 

 

Financial stocks are another sector that has been touted as having all the bad news baked into the prices now. But, just like the retail sector today the financial sector also sold off. I have become very displeased with CNBC for their blatant ‘pumping’ of stocks by bringing on people who have positions in various stocks and/or sectors and they say how great a bargain they are now. Then to only see them continue lower in the following weeks. Except for a few smart and intelligent reporters on CNBC they have turned into the TV version of the Yahoo message boards. CNBC… shame on you!

As I said this morning we are holding our short position on the Dow Jones Industrial Average and that has not changed. That trade has worked well and we are going to keep it until the price stops us out (at break even) or we reach the lows reached back in the middle of last month. If we reach those lows on the Dow we are likely to see a battle of greed and fear and thus we will form some support at that region which would be a great time for us to take our profits from the trade. At that time we will determine our next play on the market. But even if the Dow reaches those previous lows again and it bounces we will still be in a bear market. As a matter of fact until further notice… we are still in a bear market.

Oil hit $100 dollars again. It really does not matter if oil is at $85, $90, or if it surges past $100. What matters is the average cost of oil, and the average has been rising over the past year and it is the average that plays an impact on our gasoline costs and heating bills. The longer the average oil price remains high the greater the impact will be on inflationary data. And inflation is what will continue to weaken the US economy even further.

Tomorrow we will get the Consumer Price Index and the FOMC minutes from their last meeting on January 29-30. Both of these events will likely have some wild impacts on the market tomorrow. Everybody is back to talking about more rate cuts from the Feds, the increasing inflation data (which does not even include the recent rise in oil) is going to impact the Feds even further.

In the after hours trading on Hewlett-Packard (HPQ) I saw a lot of selling on the strength. If we see HPQ pull back after their good earnings report we will know that nothing matters at all, good or bad earnings people just want to cash out. We will watch to see how they trade tomorrow.

Stock Market Summary for February 13th 2008

market summary 2_13_08

 

 

NEW YORK (AP) — Wall Street moved sharply higher Wednesday after the Commerce Department reported an unexpected increase in retail sales last month and eased some concerns about consumers’ willingness to spend despite economic uncertainty…

Give me a freaking break… Give the press a piece of news and they jump all over it without understanding the real dynamics of the markets. As you read in my post early this morning regarding retail sales the change was minor and the trend of retail sales remains poor, at best.

The markets advanced 18 on the S&P, 178 on the DOW, and 54 on the Nasdaq. But the volume was weak on the advance. As we have been seeing since August of last year, the selling has been on higher volume than on the upward rallies. The recent few trading sessions are no exception. Volume has weakened as prices have moved up. In technical analysis this is always a sign of a direction change.

Over the weekend I posted a chart of the Dow Jones Industrials. And on that chart I highlighted certain support and resistance levels that we were going to watch closely to make an entry into the market by shorting the Dow. Today the Dow traded very close to the resistance level I discussed over the weekend. Today we took a position in symbol: DXD. This is the Ultrashort of the Dow. The volume today on the price advances was very weak and this built our confidence that this move up to resistance was likely going to be stopped. And it was, prices did not advance any further past the resistance level.

This type of trade offers us a good risk to reward profile. Because it offers to us a clear point at which to know if the trade is going against us and the potential reward is very good if the trade follows as the charts say it should. Now of course news can always throw a monkey wrench into the very best of trades, but at least as far as the chart is concerned this was a good opportunity to take a short position on the Dow.

We will know if the trade is going against us if it breaks upward through resistance, that resistance line is our ‘line in the sand’ and we will close out the trade and go short again on the next resistance level above. Should this be the start of the next leg down now we are protected in that our entry point should protect us from any small bounce from support (purple line – was resistance, now support). Should the Dow bounce from that level we still have our ‘line in the sand’ (which would now be resistance again and if it breaks upward we close the trade. So different possibilities in trading behavior in the Dow leaves us with a clear exit point. Should this be the start of the next leg down then I see the lows from the middle of January  coming back into play which will be a substantial gain for our short on the Dow.

The chart below is an updated chart from the one I posted over the weekend. Notice the trend line I applied to the RSI. Each rally attempt has been stopped by price resistance levels and RSI trend. The circle on the price is where we entered our short today. At the bottom of the chart you will see the volume, and a moving average (black line) has been superimposed over the volume levels. Notice how the volume has been drying up on the recent upward rally. This tells us the rally is losing momentum and conviction and that a fall in the Dow is near. Also note that volume has increased during times of selling and decreased on the buying rallies.

updated dow chart

 

 

 

 

 

 

 

 

 

 

 

 

Tomorrow we get the weekly initial jobless claims and we have Ben Bernanke and Secretary Paulson testifying before the Senate Banking Committee on the state of the economy… oh boy, I can’t wait for that one. Better get the popcorn ready now.  :)

Should be an interesting day tomorrow for sure. On Friday night I will discuss the possibilities of a ‘sucker rally’ which could draw in the bulls to only slaughter them later in the year. Film at 11.

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Retail Sales Data – February 13th 2008

This morning we received the monthly sales data from the US Government. The headline was that retail sales were up 0.3% where the expectations were for a negative 0.3%. The media says that retails are better than expected and is making a big deal about the surprise upside to the top line number we received this morning. There were some this morning that attempted to argue that the economy is strong and that the data we received shows that the "consumer shows great ability to bounce back". For those that know how we operate here we are NOT impressed with snapshots of data, we want to see the trend.

So lets take a look… the chart below is what the media is getting excited about. It is the top line (headline) retail sales data. The chart has been updated to reflect this mornings new data. This is a 2 year chart of top line retail sales data, kind of all over the map and difficult to determine any meaningful trend. The media is making a big deal that today’s data was better than expected, and what they are excited about is the difference between the two red arrows (last month and this month).

The purpose of showing this chart is to highlight that it is difficult to see any long term trend. 

retail top line

 

 

 

 

 

 

 

 

(Retail sales data, raw data as provided by US Census Dept, chart source: Economy.com… edited by rebeltraders.net)

Now lets look deep inside the retail sales data, the data that no one seems to ever talk about in the media. The next chart is retail sales growth as measured in year over year net changes. Now trends become clearly visible.

This 20 year chart shows that the long term trend has been down for a long period of time. Technical analysis is not just for stock charts, it can be applied to many forms of data, especially when the data pertains to the actions of people. Just as in the stock charts we have certain patterns that we use to gauge the most likely path of prices. In this case we can use those same trend lines and patterns to provide an in depth view of this data and give us clues to the outcome.

On the chart below I have identified a very classic "bear flag" pattern which in price forecasting tells us that the probability of further declines is likely. I have indicated with a red arrow where retail spending is likely to go.

retail year over year

 

 

 

 

 

 

 

 

(Retail sales data, year over year, chart source: Economy.com… edited by rebeltraders.net)

The headline chart may be exciting for the media, but the long term trend chart is what we want to see.

 

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