Walmart Blues and Sequestration Threats

The market was drifting along within a point or two of its opening (reminding us of every day this week) when suddenly it fell 1/2% around 2PM. The culprit was WALMART whose internal emails were released suggesting low sales for the month. It was big news as the pundits said this was evidence for the end of retail.  Cooler heads suggested that it would mostly affect the low-end retailers and was probably due to reinstatement of the 2% payroll deduction that has cut paychecks.  For many on the lower end of the income ladder, a 2% hit took all of their discretionary income.

WALMART (from ZeroHedge)

“Wal-Mart shares are plunging as the firm reports a 'total disaster' in its February sales. Bloomberg obtained internal emails that note:

"In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal-Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company....”  Full story at…

http://www.zerohedge.com/news/2013-02-15/wal-mart-stock-drops-after-it-says-february-sales-total-disaster-worst-montly-start-

SPENDING CUTS LOOM AS THE NUMBER 1 THREAT TO MARKET (CNBC)

“…Art Hogan, managing partner at Lazard Capital Markets, said investors' lack of concern over sequestration comes from three factors: A belief that Congress will find a last-second compromise, a la the cliff; less concern about the spending cuts than the tax increases; and ‘a lack of understanding over what this really means in terms of how much of a drag this is on GDP’… Most economists pin the impact short of 1 percentage point, compared to the full cliff's potential impact of upwards of 4.5 percent.” Story at...
http://www.cnbc.com/id/100464350

MARKET RECAP

Friday, the S&P 500 was up down 2pts to 1,520 (rounded).  VIX was down about 2%, to 12.46. 

As I’ve said before, the falling VIX remains good news, but the rate of decline isn’t much, so the VIX indicator remains hold.  In fact all indicators are neutral at this point except for Price action and that is only marginally positive.

Volume was high today, 25% above the monthly average.  I think the Walmart news spooked some investors and retail stocks dropped across the board.  Overall the market recovered and it was generally up in the final hour, so the pros were not concerned. (The last hour is considered the smart money because that’s when the professional do most of their trading.)

 

Market internals are not giving any clue regarding future market direction so we'll have to see what the future brings. 

 

Markets will be closed Monday for President's Day so the next blog installment will be the evening of Tuesday, 19 Feb 2013. 

NTSM

Friday, the NTSM analysis remained HOLD at the close. 

MY INVESTED POSITION

Based on a BUY signal 7 of 9-days, and more importantly, consecutive closes above the prior high of 1466, I moved into the stock market at 1471 on the S&P 500 on 14 January.  I am currently invested in a range of near 50% invested in stocks.