When it comes to mythical beings, Mr. Market can be surprisingly human. You see, like all of us, Mr. Market is prone to emotional swings and knee-jerk reactions. And as a result... he makes mistakes.
Learning From Mr. Market's Retail Blunder
By Marc Gerstein, director of research, Chaikin Analytics
When it comes to mythical beings, Mr. Market can be surprisingly human.
One of those mistakes happened during the retail wipeout earlier this year...
On May 18, Target (TGT) reported a bad quarter. The company also provided grim guidance for the rest of 2022. Its stock fell 25% that day.
Even worse, Mr. Market presumed guilt by association. And he made his emotions about the retail sector darn clear to investors...
The SPDR S&P Retail Fund (XRT) dropped 8% on May 18. Many other retail stocks fell alongside Target that day as well.
Now, Mr. Market had good reason to frown. In the current environment, it's reasonable to assume that the cost and supply-chain problems aren't unique to Target.
Plus, Target had inventory problems as well. It didn't recognize changes in post-pandemic buying preferences quick enough. It should've stocked fewer expensive items for homebound living.
Merchandising miscues are an annoying but ordinary part of doing business in retail. So, we can't blame Mr. Market for worrying that other merchants might slip up, too.
But in this emotional knee-jerk reaction... Mr. Market made a mistake.
Today, we'll take a closer look at that mistake. And more importantly, we'll go over what it means for individual investors right now...
Ninety days ago, Wall Street legend Marc Chaikin issued a dire warning for U.S. stocks that quickly came true. Today, his systems just detected the next massive shift headed straight for U.S. stocks. And just like before, you have a very narrow window of time to prepare. In fact, history shows it could arrive by the end of July. Click here for the full details.
It's actually much bigger and more important than what happens to the Nasdaq or S&P 500. Yet some of the world's best investors are practically drooling in anticipation. Because this crash will create a slew of 100%-plus opportunities... backed by legal protections that stocks can only dream of. A top analyst tracking the story believes this could happen within months – and you must prepare now. Get the full story here right away.
As I said, on May 18, Mr. Market's wrath spread across the entire retail landscape...
For example, budget-retail giant Dollar General (DG) fell 11% that day.
Mr. Market's emotions got in the way. He assumed that Dollar General would run into the same problems as Target.
But even reasonable assumptions can turn out wrong. And in the end, Mr. Market made a mistake by smacking down Dollar General (DG).
In short, Mr. Market failed to appreciate the benefits of simplicity.
Target isn't simple. It's one of the powerful, big gorillas of the retail industry.
The company features an extremely broad assortment of products, including many premium items. And its sophisticated inventory systems translate into well-stocked shelves in stores.
It's wonderful when things go well. That's why many folks label Target as a "superstore."
But huge businesses also have many opportunities to make errors. That's where Mr. Market revealed his emotions...
You see, Target committed the type of error that Dollar General can't make.
The company loaded up on high-priced goods. It expected the pandemic-buying surge to last. And now that things are turning, it's sitting on a mountain of slow-moving inventory.
Most of Dollar General's offerings (76.7% in 2021) are everyday consumables. The company doesn't offer premium products. So in turn, it has fewer opportunities to misjudge consumers' willingness to buy what it stocks.
Fortunately for Dollar General's investors, Mr. Market proved to have a "good human" trait. Before long, he admitted his mistake and quickly corrected it. Take a look...
Target's stock is down a staggering 33% since May 18. But as you can see, after a short panic, Mr. Market reversed course on Dollar General. It's up roughly 10% over the same period.
The future looks similar as well. Our Power Gauge system agrees with Mr. Market...
Dollar General's overall Power Gauge ranking is "bullish" today. Meanwhile, Target is rated as "neutral" in the system.
Folks, in an emotional market, people make mistakes. And so does Mr. Market.
One of the keys to success is recognizing your mistakes – and fixing them. That's what Mr. Market recently did with Dollar General. And you could consider following his lead today.
In the end, don't let your emotions – or Mr. Market's emotions – get the best of you.
Good investing,
Marc Gerstein
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.23%
4
21
5
S&P 500
+0.35%
37
336
124
Nasdaq
+0.64%
11
55
33
Small Caps
-0.76%
266
1139
497
Bonds
-1.68%
Utilities
+1.04%
0
28
0
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks remain Bearish. Major indexes are mixed.
* * * *
Top Movers
Gainers
NOC
+3.77%
LHX
+3.74%
CEG
+3.31%
GWW
+3.28%
WST
+3.10%
Losers
NCLH
-9.55%
RCL
-7.19%
CCL
-6.82%
CZR
-4.59%
PENN
-3.99%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
No earnings reporting today.
Earnings Surprises
No significant Earnings Surprises in the Russell 3000.
* * * *
Sector Tracker
Sector movement over the last 5 days
Discretionary
+2.25%
Communication
+2.13%
Real Estate
+1.37%
Staples
+1.15%
Utilities
+1.10%
Information Technology
+0.99%
Health Care
+0.99%
Industrials
+0.24%
Financial
-0.13%
Materials
-1.88%
Energy
-6.21%
* * * *
Industry Focus
Pharmaceuticals Services
16
27
2
Over the past 6 months, the Pharmaceuticals subsector (XPH) has outperformed the S&P 500 by +14.70%. Its Power Bar ratio, which measures future potential, is Very Strong, with more Bullish than Bearish stocks. It is currently ranked #1 of 21 subsectors and has moved up 1 slot over the past week.
Top Stocks
AVIR
Atea Pharmaceuticals
AERI
Aerie Pharmaceutical
AMPH
Amphastar Pharmaceut
* * * *
You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, click here.
You're receiving this e-mail at diansastroxz.forex@blogger.com.
For questions about your account or to speak with customer service, call +1 (877) 697-6783 (U.S.), 9 a.m. - 5 p.m. Eastern time or e-mail info@chaikinanalytics.com. Please note: The law prohibits us from giving personalized investment advice.
Any brokers mentioned constitute a partial list of available brokers and is for your information only. Chaikin Analytics, LLC, does not recommend or endorse any brokers, dealers, or investment advisors.
Chaikin Analytics forbids its writers from having a financial interest in any security they recommend to our subscribers. All employees of Chaikin Analytics, LLC (and affiliated companies) must wait 24 hours after an investment recommendation is published online – or 72 hours after a direct mail publication is sent – before acting on that recommendation.
This work is based on SEC filings, current events, interviews, corporate press releases, and what we've learned as financial journalists. It may contain errors, and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility.
Post a Comment
Post a Comment