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We're in the heat of earnings season for retail, and we're getting a feel for how well the consumer is weathering through the recent slowdown in the credit cycle.
That's right, the credit cycle, or what we will refer to as liquidity.
It affects us all, not just those multibillion-dollar corporations trying to finance equipment or buildings. It trickles all the way down to that piece of plastic in your wallet or purse - the credit card.
We've heard from a few retailers that consumers like you and I have pulled back on the purse strings.
Inflation and higher interest rates are slowing the consumer's spending, and that accounts for more than 70% of the economic activity.
So, like me, there are a few things you should be watching.
This is going to be a veritable battleground for the next two weeks.
If you're not careful, you just might end up a casualty. But if you're savvy, you can make a killing.
Well, I took some time to break down everything I'm seeing in the retail sector...
I really wanted to hit a sector other than the Retail group today, but the earnings season just won't allow for that to happen.
That's right, we're in the heat of earnings season, as we're getting a feel for how well the consumer is weathering through the recent slowdown in the credit cycle.
That's right, the credit cycle, or what we will refer to as liquidity.
It affects us all, not just those multibillion-dollar corporations trying to finance equipment or buildings. It trickles all the way down to that piece of plastic in your wallet or purse - the credit card.
We've heard from a few retailers that consumers like you and I have pulled back on the purse strings. Costco told us we were spending less on TVs and other expensive items. Home Depot and Lowes said last week we're doing fewer expensive DIY projects around the house.
Why? Simply put, it costs more! Inflation and higher interest rates are slowing the consumer's spending, and that accounts for more than 70% of the economic activity.
So, like me, you should be watching the next two weeks of retail earnings for two reasons:
- This is going to be the battleground trading sector over the next two weeks. Sure, there are a few companies in the tech and healthcare sector that will report during the same time, but the retailers OWN these two weeks, and as such, will be the "target-rich environment" for trades.
- The retail sector has good representation in the iShares Russell 2000 ETF (IWM). It's trying to break above its 200-day moving average (MA200), which would likely trigger a rally for the "risk-on" sector, as traders would start migrating back to this index. The retail earnings results will play a role in the IWM's ability to rally above that trendline and possibly cause a broader move higher in the market.
Here's your list of companies providing their results throughout the next few weeks, alon…
About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Penny Hawk. He also contributes to Money Morning as the Quant Analysis Specialist.