Here’s Why I’m Shorting This Sport
Market Trend: Topping
Pattern
Market Outlook: Neutral
Peter’s
Pick: Short the Sport
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The Broad Market Outlook: Wall of Worry, Part Deux
OK, so we got through a solid rally for a
quarter. Does the market take a summer breather? We think so, but only the
data knows for sure. What we will need to avert a significant pullback is some
stronger evidence that the rocking by the Fed and Bush tax cut is actually
getting the economy rolling. We continue to have our doubts about that, with
last week’s downward revision of the GDP yet another sign of present
sluggishness.
Look for a rocky week ahead that can only be saved by the ISM Cowboy and the
Jobs Report Kid. (See below.)
The Week’s Macro Data Market Movers: The ISM Cowboy
The
Macroeconomic Calendar
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* Potential major market
movers in red
With
Wall Street continuing to plumb for signs that the supply side of the economy is
recovering, Tuesday’s ISM will be the most important report of the week. After
falling below 50 in March, it is once again poised to crack the 50 market again
now. Any number greater than 53 will provide the market with a nice boost. Any
number less than 50 will add fuel to a nascent bearish fire. The
other big report of the week will be the jobs report on Thursday. So far, there
are no signs of anything other than a weak jobless recovery. If the
unemployment rate jumps up, look for a sharp Wall Street reaction — and all the
more so if the rate drops below 6.
Peter’s Pick:
Short
Dick’s
Sporting Goods
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Call
me crazy, but when an IPO stock goes from $12 to $38 since February and the CEO
is talking 20% annual growth and a rapid expansion plan for a company that sells
something with margins as low as sporting goods, I gotta think that this is
going to be a good short.
I’m
holding off on it right now, but the minute I see some weakness, I’ll likely
take a nibble — and build if it starts to fall off the cliff it’s built. So
stick this on your watch list if ye like. (P.S. A little mole told me that
Dick’s is likely to soon take an earnings tumble because of bad weather in the
Northeast where it has a lot of stores.)
If
you
have a favorite macroplay or stock you would like us to consider in this column,
send an e-mail to
peter@peternavarro.com or go directly to
https://www.peternavarro. com. We’d love to
hear from you.