Friday, November 30, 2012

Sleepwalking Into The Abyss

As it was in 2008, Walmart and the stock market (S&P)
Converging - to the downside.
Only because real people can barely afford to eat.
So unfortunately, it's that time again, for everyone to WAKE THE FUCK UP.
Or, just sit still and get annihilated.

I realize that we are all being slowly euthanized by a lethal concoction of Central Bank dopium, laced with junk food and junk culture, cut and distributed by Wall Street front running bots, and blown straight up our asses by the media, but it's incumbent upon us to lift ourselves from this dopium induced coma to figure out what the hell is going on, before it's too late...

Wall Street has its head buried so deep in the Central Bank feed bag that they are giving off no useful information as to the true underlying health of the economy.  And of course, the media are so worried about fiscal cliff boogeymen and otherwise administering our daily infotainment enema, that they too are totally oblivious to all risk.  Then there's the game show host politicians running amok like moronic buffoons doing whatever they do.

So we use the few guideposts that we have available to us.  Tonight I took a closer look at the multi-year chart of Walmart (above) and was very disturbed by what I saw.  

The first key observation is that back in 2007 (above chart, to the left), right around the time that the overall market (black line) started to come down is when WalMart (candlesticks) started to outperform (Point "1").  Prior to that period, Walmart had been underperforming the market.  Which makes sense, because the market rolled over with the economy and Walmart being the low cost junk provider benefited by the lackluster economy.  Look to the right however, and this time we see no period of diverging performance during the past year, however at point "2" there is a point at which Walmart starts to outperform and catch up with the overall market.  Not surprisingly point #2 is the exact same time at which the overall stock market decoupled with the economy, as indicated by Zerohedge.

In other words, Walmart is confirming the fact that (even more) massive Central Bank dopium which went into effect late last year (LTRO in Europe, Coordinated Central Bank actions etc.), and continued throughout all of this year, was the only thing driving the overall market higher.  The underlying fundamentals have been deteriorating steadily throughout this entire period.

Which gets us to the next major takeaway.  As you can see above, it's hard to tell exactly when back in 2008, the stock market and Walmart converged.  However, when you look at the close-up chart below it's crystal clear:  Lehman day occurred almost to the day when Walmart peaked out.  Then stocks fell for a few days in unison, but Walmart managed one big (50%) retracement rally after which point in time the wheels came off the bus, both for the market and for Walmart.  Now look up again to the chart above and to the far right to today.  The market and Walmart are now fully in synch to the point of overlapping on the chart and Walmart has now retraced 44% of its prior high.  So my key takeaway is that the stock market is finally starting to realize the economy is rolling over and it's now in synch with the one stock that has done very well in a tepid economy but can't do well in a non-existent economy.

Walmart and S&P 500 from 2008

Bonus Chart:

Apple, the other bellwether stock, forming a picture perfect evening star reversal formation at the top of a 46% a-b-c retracement on ever-declining volume, with the market at max overbought.   Other than that, everything is A-ok: