Low Market Volume Continues As Retailer's Future Looks Grim

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Well, to most people it looked like just another uneventful, holiday trading day. However, there were some strong moves in some sectors, especially for those that own SRS. A lot of bad retail news circulated the media today, as analysts begin to evaluate holiday retail sales and predict their future performance for 2009. And most everyone agrees, it does not look good. Even though we have been discussing this principle here for months, it seems as if it is now beginning to hit the market again as almost every big commercial REIT got slammed today, having SRS end up over 10% today. This should be just the beginning.


As for me, I plan on steering clear of almost every type of retailer you can think other than discount retailers like Wal Mart or Old Navy. The projected numbers don't look good, and we seem to have a trend of performing worse than expectations lately. At the end of October, ICSC (International Council of Shopping Centers) forecasted 6,100 stores closing in 2008 and 3,200 stores closing in the first half of 2009. This was before big retailers such as Circuit City, Office Max and a few others announced their mass closings. I'm sure this forecast has been revised since then. Mind you, these are national retailers and do not factor the mom and pop retailers that will also be going dark. In fact, I attended the ICSC national conference this past year in Las Vegas and it was pretty dead. All of the retailers said they were done expanding for 2008 and probably most for 2009. Many of the booths were empty and, frankly, aside from losing money at the tables, there wasn't much to talk about.

Some have asked me why I focus so much on retailer's performance. Aside from actually tracking their stock performance, retailers are the life and blood to shopping center owners. As they go down, so does the real estate. With the ammount of leverage that has been placed on these conduit loans, just losing 10% of your tenants can put you in the red. So the fate of retailers are very much tied to the fate of SRS and even financial etfs such as SKF and FAZ. As these properties will most likely be given back to the bank, a new round of bailouts will be need to cover the billions of dollars of outstanding loans that are coming due. Our greedy leverage is going to kill the US for the next few years.

So I continue to be bullish on SRS. Also, another good stock to watch that I received a tip from a reader is XRT. It is a retail etf fund which seems to be moving a bit more stable with the market, for those who have become skittish with the Proshares etfs (I have not). Using a put on XRT could be coming up very soon for me.

I still can't find many reasons to buy long here in the short term other than some commodities. GDX, SLVR, DIG(or other oil etfs), and POT are ones on my radar if I have to eventually go long. Financials scare me to death as I feel they have a whole new disease to deal with when commercial loans hit their books. Why do you think they're still not lending?

Anyway, like we expected volume should continue to stay low until after the new year. People may begin to slowly drag themselves back into the office this week, but I am not expecting much. I am excited to get volume back in this market and see where it takes us. Bear tendencies have definitely returned to the market and should continue for a bit longer. Aside from Obama's inauguration, I don't see a lot left to spark buying for a while.

I hope everyone had a good weekend. Thanks for the comments about Lending Club. I also got some emails verifying that returns in the teens had been reached with their initial investment returned. That's the key, getting back what you put in. Nine out of ten people seemed to have something positive to say, so thats pretty good, in my mind. So I think I am planning on allocating some funds there, nothing big at first, to see if I can get myself some 10%+ returns. Everything counts. Have a good night, Happy Trading and we'll see you tomorrow.

5 comments:

  1. Anonymous Says:

    Hello,
    "Aside from Obama's inauguration, I don't see a lot left to spark buying for a while"
    Iwould like to add the remaining 350 TARF. News on that could unleash the bull.
    THX

  2. Anonymous Says:

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    Still Indian stock market requires one triggering
    point which can give clear trend in the market.

    Still Nifty is in mix zone. Nifty will be bullish only if Nifty manages to trade and sustain above 3150-3200 level below these levels
    bears will rule the dalaal street.

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  3. Hard Says:

    We all get bombarded every day with mails, morning briefs as to which stock we should pick and how will be the market trend today. Every time the brokerage houses will send the stock market tips> as if we all are playing a gamble and need the tricks as to how we can win it. And anticipating as to how to do stop loss and at least will make smaller profits. What most of the investor do is they consider short term trading as the long term investment and believe as to how it can be doubled in a day. Buying a stock just because the price is low and some stock market tip you received that this will boom in the market today. What most of us do is that we all trade with money which we can’t afford to lose but the market always says that invest only that money which is in excess to you. All of these are the big mistakes which we commit every day in spite of being reminded every time that we should complete our home work for the next day.
    Things to Remember when invest in stock market: >
     We believe that the fundamental says invest in those company about which you know completely , but that doesn’t mean you fall in love with a company and a particular stock just because you are familiar with it or it create news in the stock market every time. Most of us just try proving our fundamentals are right and for that we apply too many technical indicators on that stock. It’s not true that the stock will go according to its fundamentals and technical, many stocks behave opposite to their indicators, thus they do not guarantee as to whether it will go up or down.
     Investors jump to penny stocks as they immediately boom in the market due to rumors what need to understand is that the Penny stocks are very risky , and on this basis make your strategy as to which one to pick from that lot and how much to invest . The portfolio of the investor should be constructed in such a manner that it allots weight age to different sector and the sizes of the stocks so that the diversification is there and the risk can be mitigated. Therefore the weight age of penny stocks in one‘s portfolio should not be more that the 15%. This is to minimize the losses and to accumulate the profits also.
     Keep a watch on the industry of the particular stock. Most of the stock behaves according to their industry trend. Thus if in the budget the government committed to play large role in the infrastructure sector , all the stocks will go react as per the budget and the whole sector recorded the jump of 12% on the next day. But it might be the case that the industry is booming and the stock is going down, therefore along with Industry, Company information is also vital.
     Past performance of any company doesn’t not hold true or affect its future performance. Many of the Indian stocks which were heavy weight in the past few years and were considered the blue chip companies in this market are either bankrupt or have become extinct in the market. Thus continuous performance analysis and evaluation is important.



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