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Wal-Mart: Don't Believe the Bounce


Retest of old lows all but inevitable.


Greetings from Minnesota, where I hadn't actually planned to spend my spring vacation. As a wise and very wealthy man once told me, "There's your plan and God's plan; your plan means nothing."

So I'm going with the flow and staying as constructive as I can. There are plenty of blessings to count out there, Minyans. Just not in the market.

Here are the curses I'm watching, as I flash-back to my childhood (and Mr. Market takes a trip down memory lane to November):

  • Now that 800 is in the S&P rearview mirror: I do think a retest of the old lows is as all-but-inevitable as Mr. Market ever gets. How hard a retest? Unless we can get the government in general to shut its gob, the test will be roughly akin to taking the MCATs on acid. Not that I've done either. I'm just saying: We're going lower, and profiting from it is going to be a confusing exercise.

  • Wal-Mart (WMT) bouncing slightly tempts me not even a little bit on either the long or the short side. I went to one of the larger malls in the Twin Cities last night, folks. Mrs. Jeffmacke and I were outnumbered by the clerks in more than one store. Even on a low-volume night, having more than one helper for each person in mid-level retailers is a bad thing.

  • Toyota (TM) is driving towards its technically friendly $60 level as its American counterparts get ready to grovel to whatever band of clueless elected officials is yelling at businesspeople this week. You all know my thoughts on how the crisis should be handled at the top (harshly). If I worked for General Motors (GM) I'd have spent the last month doing one thing: Demanding that my supplicants make my business seem as "complicated" and "too big to fail" as humanly possible.

  • Back to Toyota, who needs no money despite having its first losing year in nearly three-quarters of a century. For those scoring at home, I was short it down to the $60 level, got long and sold a good chunk at $70. Now that, my friends, is a trade with something for everyone: Some may think it seems boastful to mention catching the move higher in a battleground name. Others -- specifically me -- think the fact that I "took off a good chunk" is as humiliating as "partially taking cover" under gunfire. "Hey, only the right side of my body got riddled by bullets!" simply isn't bragging.

  • Speaking of half, Thomas Wolfe's famous warning that you can't go home again was only half right. Going home is akin to revisiting lows; you can go there, and might even enjoy at least part of the trip (thank you just for existing, SDS ETFs, you crooked-seeming grandchild of portfolio insurance). The downside: The trip leaves you feeling net-miserable, slightly afraid, and questioning what you've done with your life since last you were here.

Seize the day, fear not the sell-off (too late now) and pass the ammunition, Minyans. The market will go where it will go; how you handle the price action is entirely up to you.

No positions in stocks mentioned.

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