The Daily Dose: Trending and Hyping

 | Aug 16, 2013 | 8:30 AM EDT  | Comments
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Stock quotes in this article:

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hd

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wmt

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amzn

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Alone in a quiet, dimly lit room on Thursday I randomly broke out laughing hysterically. I have people asking me for stock recommendations on Twitter, rogue characters on Facebook bombing me (my team controls the account nowadays, fancy I know) and Chinese TV stations sending requests to patch in to talk about markets via Skype.

That circus of stuff is in addition to my daily job of "helping people to make money so they live better." So as of today, I reckon the mind is gone for the week, reaching that mental breaking point that is serves as a "tell" to lift myself from the chair and go for a walk.

Before I head off for a stroll in the local park, listening to some Mozart, I want to leave you with what's #NowTrending in the stock market. Let me be frank: The only thing not trending are those #geeks that get paid well to promote index targets and blow hot air on how stocks will be higher in value by year 2,100, They are luring in the suckers while their firms dump, dump, dump (come on, who do you think has been selling the market in the last nine sessions, widows and orphans?).

Use this trendy list of organic research as a mental backstop to the ridiculousness bound to be heard this weekend around the financial internet.

  1. Shares of fundamental disaster stories, across sectors, such as teen retailer Aeropostale (ARO), continue to trade down, which is not a good sign for those seeking a return to uber bullishness. It's the market's way of saying an earnings warning for second quarter 2013 is unlikely to be the last for a number of macro reasons.
  2. Second derivative housing plays, for example Home Depot (HD), are logging high volume sessions in the red, almost as if to hint at a shift in year,  plus positive commentary by execs on impending upcoming calls.
  3. The market unwinds longs in the face of the European Union returning to growth. Message? The U.S. isn't doing its job of re-accelerating in terms of growth, as seen in Macy's (M) earnings.
  4. I will continue to highlight the lowlight that is disinflation. You really need to care on companies lacking pricing power at this juncture in the recovery. Yes it's a #geeky concept, but it's super important. No pricing power stacked alongside intense price-to-earnings multiple expansion (as is the case at present) is a recipe for pressured stock prices (valuations will have to adjust as corporates report their financials).
  5. Mr. Market is enjoying middle-fingering good news, which may ultimately push off the dreaded taper, assuming stocks continue to slide until the next Fed announcement (I continue to think the taper will be spotted in December).
  6. Oh, hey, look negative GDP may finally be happening if you believe in the awesome powers of the market. I was early:
  7. A violated support level on the S&P 500 should matter to you, unless you are one to hold a stock forever and gift it to the grandkids.
  8. Earnings season winners that landed a pop in their stock prices have now largely given back gains. Guess their epic performances in second quarter 2013 will be a distant memory by the end of September.
  9. Woooshhhhhhh Visa (V) shares, the piece of plastic for Middle America
  10. No rotation into consumer staples = no good11. Since August 2 market peak: Dow Transports -4.7% vs. S&P 500 -2.8%.

One Last Thing

Since you unlikely got it straight on Wal-Mart's (WMT) earnings (unless you tuned into the homepage interview TheStreet's Debra Borchardt and I did on the quarter yesterday) here is the daily dose of truth.

What Wal-Mart served up for its second quarter to a growing number of weary investors is identical to the first quarter: The press release was littered with excuses and a large dose of reality regarding the health of a consumer not leveraged to ripping stock prices and home price appreciation. The fact is that Wal-Mart's customer base is running out of money a couple of days before their paycheck arrives every other week.

That is a major issue. But it is especially so considering Wal-Mart is investing billions of dollars to lower merchandise prices and as noted by the company, food deflation is front and center on the shelves. Theoretically, the Wal-Mart consumer should have slightly more spending power, not less (gas spike in July tempered this for the second quarter).

There is something else in the mix here, however, and that is Wal-Mart's reputation of strong operational execution crumbling right before the eyes of investors. These investors want to believe the company is still being run as Sam Walton ran it before he died in 1992. Investments to address international, from uncompetitive prices and poorly laid-out stores, continue with no visible sign they are driving improved results. This comes as the company is pouring large sums of money into e-commerce to compete with Amazon (AMZN). These investments in structure, and lower prices, are not a recipe for a $0.05 earnings beat.

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