Friday, January 8, 2010

The Peter Lynch Method says thumbs down

I was in the local appliance retailer today and even for a weekday afternoon it seemed rather empty to me. (My dishwasher was shot, in case you wanted to know).

When I got to the store, there were a few salesmen hanging around, unlike what I remember on a pre-Christmas weekend, when you had to bribe the cashier to find you one. He was very nice, of course, and put up with all my questions. I made my purchase in a reasonable amount of time because I believe in Sy Syms (you may have to be from the NY metro area to get that one - an educated consumer is our best customer) and knew what I wanted.

Then I asked him - are people buying stuff?

His demeanor wilted a bit and he sighed, "nope."

He then followed that with remarks about how he does not see how the pundits are saying things are improving. Although I forgot the exact phrase he used, it was something like - it's still terrible (meaning the economy).

Earlier this week, I had some short sale ideas in retail and was waiting for confirmation to recommend actually shorting. This chart of TJX looked pretty bad a few days ago.

A high volume breakdown Monday when the rest of the market was soaring higher. The trend was down and the 50-day average was rolling over. Looked like a good short to me after a better timed entry. Then this:

Yes, I know a failed sell signal becomes a good buy signal but not necessarily when it has already gapped up like that. But it totally does not jibe with what almost any local merchant will say.


paulocuana said...

TJX is truly the exception that proves the rule. They operate the TJ Maxx and Marshal's discount clothing stores. So a breakout for TJX indicates an end to the rally in risky stocks and a return to defensive stocks.

Ok, I just made that up but it could be true.


Kay McCharles said...

You obviously don't HAVE to shop at TJ Maxx, unlike me. I'm there a lot, looking for fresh shipments of ties and other accoutrements. I can see how they'd buck the trend, as a store; the stock, I don't know.