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Booming Retracement

This is a syndicated repost courtesy of Stool Pigeons Wire at Capitalstool.com. To view original, click here. Reposted with permission.

4:40 AM ET

Liquidity moves markets!

Follow the money. Find the profits! 

The rebound from Friday’s carnage has stalled in the pre market, but indicators say, “Wait! There’s more!”

The ES fucutures need to clear 3408 to confirm that. If they roll over below that, bears could be in charge.

In any event, the worst downtrend is broken so we’re starting with muddle.

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7 AM 2-3 day cycle projection 3430.

30 minute bars

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Monday Monday, Can’t Trust That Day

We have a selloff in the pre market, but the TA says, don’t trust it yet. Or maybe, “Trust, but verify,” for those of you of a certain age, like me.

Meanwhile, as for chart picks, I didn’t see much that I liked in this week’s screens. I didn’t add any longs. We’re already loaded to the gills there. I added two shorts, and one is conditional on a limit price entry.

4 picks were stopped out last week. With the the 2 new picks, that will leave 16 open picks, including 12 longs, and 4 shorts.

List performance improved last week, with the average gain increasing from +2.9% to +3.8%. The average holding period rose from 12 calendar days to 13, which is still less than the usual 16-20 days because I added a slew of new picks the previous week.

Chart picks are theoretical, assume 100% cash stock trades, no margin, no options, no futures.

I once read somewhere that past performance doesn’t indicate future results, or something. Is that true? Hopefully it is, considering some of my past performances.

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Past performance doesn’t indicate future results. There’s always risk of loss. Chart picks are theoretical for informational purposes only. These reports are intended for professional investors and experienced individual traders. Do your own due diligence before trading.

Disjointed Economy Points To Bad Things

Last week I was surprised when the US Government’s retail sales data hit a new high. No way, I said.

Well, Way!

Yes, some retailers are seeing booming sales, particularly online, and … wait for it…

Grocery stores. Even after pulling back from the lockdown spike, they’re still up more than 7% year to year.

Now there’s a basis for a thriving, growing US economy.

Not.

And of course, there’s the surging growth in e-commerce. I’ve put it on a chart along with grocery sales going back 5 years for perspective. The average growth rate, which was already a sizzling 10-15% per year, has roughly doubled in e-commerce. The average growth rate for groceries has tripled. Apparently pandemics are good for some businesses.

Something struck me about this chart, apart from the COVID driven surge. Over the past few months, the annual growth rates in both series have been plummeting. “Growth” ain’t what it used to be. This drop implies contraction since July.

But my purpose here is not to pretend to be an eConomist. I just wanted to point out the government statistics, particularly those that the financial news headline writers feature, don’t tell the whole story.

Furthermore, we know that these sales are just coming out of the hides of other businesses. Lodging, travel, recreation, and transportation sales have collapsed. Gross tax collections show us the truth. The US economy is dead in the water, not growing at all, while remaining at a level a few percent below what it was last year at this time. It’s hard to gauge just how much in real terms, because we really have no clue how high inflation really is. But the nominal actual totals are lower and flat.

That’s what this report focuses on.

The issues then facing us are whether this will be the basis for more stimulus. That would mean more spending, more debt issuance, more pressure on the financial markets, and a need for more Fed support to prevent a market meltdown.

Here’s what the current Federal tax collections data tells us about what the real condition of the economy is, and what to expect as a result.

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Wall Street Examiner Disclosure: Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. No endorsement of such content is either expressed or implied by posting the content. All items published here are matters of information and opinion, and are neither intended as, nor should you construe it as, individual investment advice. Do your own due diligence when considering the offerings of information providers, or considering any investment.

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Lee Adler

I’ve been publishing The Wall Street Examiner and its predecessor since October 2000. I also publish LiquidityTrader.com, and was lead analyst for Sure Money Investor, of blessed memory. I developed David Stockman's Contra Corner for Mr. Stockman. I’ve had a wide variety of finance related jobs since 1972, including a stint on Wall Street in both sales, analytical, and trading capacities. Prior to starting the Wall Street Examiner I was a commercial real estate appraiser in Florida for 15 years. I was considered an expert in the analysis of failed properties that ended up in the hands of bank REO divisions, the FDIC, and the RTC. Remember those guys? I also worked in the residential mortgage and real estate businesses in parts of the 1970s and 80s. I have been charting stocks and markets and doing analytical work since I was a teenager. I'm not some Ivory Tower academic, Wall Street guy. My perspective comes from having my boots on the ground and in the trenches, as a real estate broker, mortgage broker, trader, account rep, and analyst. I've watched most of the games these Wall Street wiseguys play from right up close. I know the drill from my 55 years of paying attention. And I'm happy to share that experience with you, right here. 

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