One of the benefits of living in central Florida with two young children is that, whether I like it or not, I frequent Disneyworld almost weekly (!). As well as having family fun and forgetting about markets at the weekends, I also get a good early barometer of how optimistic the consumer is feeling. After going to Disney this much for so long, I know, month by month, whether it’s a busy time or not. It’s a small world, after all…
So let’s see what I noticed recently and how you can profit…
First let’s check in with the overall market; the starting point for any action we take as investors. Here’s the S+P, the curvy blue line is the long term average price:
It seems I was right to gingerly give the driving seat back to Mr. Bull for now. Though a short term pause for breath seems imminent as I wrote last week, the bigger picture is that the long term average line has turned back up and the S+P has broken out to new highs. Mr Bear may have to wait a little longer if he’s paying attention to this chart.
What makes me even more bullish is what I saw at Disney these past few months. Usually there’s a nice quiet time to visit the parks- September and October- but not this year. Quite the contrary- it was PACKED like I’ve never seen it. Iowans et al were there in force! You could almost feel the pent up spending demand in the air. The consumer is back as we go into the holiday season and the closely-watched Black Friday.
What coincides with that is a break out of the retail sector as we can see below:
As you can see, after staying flat for a good while, the retailers are pushing higher. I’ve been watching this sector closely for a while, and after a few false starts it looks like it could finally be their time. Shifting into the right sector at the right time can be as much as 30% of the battle when trading. Watch the next market correction closely- it could be setting up some nice trades in the retail sector as well as telling us how serious Mr Bull is.
The author has an interest in the securities discussed in this article. Source of charts: stockcharts.com
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