Winners and Losers

Watching WMT this morning and wondering what it all means? After surging nearly 7% on blowout earnings, the stock has given up all its gains after the company’s commentary confirmed the obvious: there are winners and losers in a pandemic.

Unlike many of its general retailer competitors…Walmart sells groceries, meaning they were allowed to remain open even during the worst of the virus’ spread. They also have a substantial online business, helping them offset the slowdown in in-store shopping. Last, customers who might otherwise have run out of money when laid off received checks from the government which allowed them to continue shopping for low-priced essentials.

The problem WMT faces, of course, is what happens now that these checks have stopped. Will the stock recouple with the economy? Moreover, will the overall market recouple with the economy?

The old adage that “the market is not the economy” has never been more true. Pundits and politicians see major indices push to new highs and declare that the worst is over. The reality is that the AMZNs and WMTs of the world are simply taking market share from the millions of small businesses that couldn’t stay alive for the past five months.

For all the major retailers which have declared bankruptcy so far this year…

…there are hundreds of thousands which have done so with no fanfare nor headlines in the WSJ. They slip quietly away into insolvency as their PPP money (if they were able to obtain it) runs out and the bank account runs dry. They’re not publicly traded, so they don’t affect the market. But, the effects will be felt sooner or later. And, more will join their ranks as the country continues to fail the coronavirus marshmallow test.

continued for members…

Futures are up slightly this morning on – what else? – a decline in VIX. Still, I don’t expect today to be the day for new highs – at least on a closing basis.

For one thing, USDJPY is falling out of bed – dropping through the SMA10 with ease……which means another day of going nowhere for the NKD.The wait for DXY to break down is officially over.

Helping to punish the greenback…EURUSD has broken out.And, gold is continuing its bounce, pushing back up thorough its SMA10.Though it rallied overnight, CL is back at TL resistance. Look for it to pull back to at least its SMA10. Longer term, the charts still indicate more downside ahead.RB has a somewhat more positive outlook…if it can punch through its SMA200.BTW, I’m running into issues again today with the ThinkorSwim platform. Charts are taking forever to refresh. I’ll get the rest of today’s charts posted as quickly as I can…but it’s going to be dribs and drabs.