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IDS World Markets Tues 16th January 07


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Alan Farley is Realmonkey.com's house T/A eggspurt (sic).

 

He's been bearish on retail for technical reasons. Now all of a sudden, he's switched gears from bearish to bullish.

 

A technical call from a technical guy? Not really. He's become a funnymentalist. Says that lower earl prices must be driving the retailers higher:

 

"Here's my apology for being too bearish on the group and calling for a breakdown by the end of 2006. Now the danger has passed (sic) and speculators are placing fresh bets that plunging energy prices will encourage shoppers to reopen their wallets in the first quarter."

 

"It's obvious (sic) that pump prices will correlate directly to retail performance in 2007. Simply stated, consumer spending should (sic) continue to perk up as long as crude oil prices stay weak or get weaker."

 

Leaving aside the humorous notion of a chart guy becoming an eggspurt on the relationship between earl and retail, take a look at the chart of DJUSRT (broadest measure of retail) and WTIC (earl).

 

See any correlation between the price of earl and the price of retail stocks? "Simply stated", as Farley would say, there ain't none. If anything, you could make a stronger case that, over the past eight years, retail and earl have moved more or less in tandem. The higher the price of earl, the better retail stocks have done. And vice versa.

 

There have been a couple of times when a high in earl correlated to a low in retail stocks (March 2003, July 2006). But those were broad stock selloffs, not just retail selloffs.

 

Methinks Farley should best stick to da charts.

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Trannies are unreal today.....

 

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big.chart?symb=amr&compidx=aaaaa:0&ma=0&maval=9&uf=0&lf=1&lf2=0&lf3=0&type=2&size=2&state=8&sid=318&style=320&time=8&freq=1&nosettings=1&rand=1281&mocktick=1&rand=5152

 

Technical b'out on the XAL works about 5-6% higher. Should take a siesta at that point. But who knows.

 

 

Another 125 points on the trannys to a new ATH and a confirming bull market signal for the Dow Theorists :blink:

 

Probably as good a sell signal as any.

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