Two Pooring of America Plays: Wal-Mart and McDonald's

Keeping an eye on our two "Pooring of America" plays - Walmart (WMT) and McDonalds (MCD). Both have rallied from the mid October lows [Oct 10: What are Walmart and McDonalds's Telling Us?] but again - you see this chart over... and over... and over... and over. If it's a commodity stock or some financial that is one thing - but these companies should be surging into the recession if the market has any health to it. When you cannot find safety even in stocks that should be the benefactors of the pooring of America and coming stimulus plan(s)! [Oct 20: Second Stimulus Plan Gaining Fans] you just have to ask how we can have an investing (i.e. different from trading) move in this market.

These 2 remain high on the radar as "tells" - I don't like their inability to break resistance - especially Walmart which, with $2 gas creating a massive tax break for Americans - should be surging pre-Christmas as each day more and more of the country is forced to shop there. [Do the Bottom 80% of Americans Stand a Chance?] The problem is while $2 gas is going to help some people pay for necessities and stretch their budget a bit, it doesn't bring jobs or pay off the mortgage that 20%+ of people are now underwater on - so we still have a long road ahead.

Keep in mind monthly retail sales come out tomorrow and I think it could be just awful - we've been huge bears on retail for over a year and with the market cratering in October and sentiment finally really hitting Main Street - I just don't see $2 gas changing that one iota. Especially as the jobs picture begins to accelerate downward (the government report for that one is Friday). This is the main issue for the next 6-9 months - the economic data will get worse - not better. I think we have a real chance for 8-9% unemployment rate by this time next year even with the government's very faulty measurement (9% government unemployment means reality is mid to high teens)

The rallies here and there will have to be on "hopes" of recovery 9-12 months out but "they" tried that in the spring by selling us on the "2nd half 2008" recovery and that was proven to be Kool Aid of the highest order. "They" will try again on the same thesis (just with a new date for recovery)- mind you. But many who tried that thesis this spring are going out of business.

This is the problem with this bear - usually by this point in a bear market we are halfway through a recession - but this bear was brought on by housing and credit which in fact preceded the whole recession time frame. Everything is backwards this time - usually housing falters after/during the recession - not precede it. So we've already taken a lot of pain but are just really entering the heart of the traditional recession phase. So if you are an adept daytrader or can be in and out of positions every 2-4 days - have at it. For the vast majority this is not an investable market - the casino giveth yesterday, and the house takes it all back today. Not worth it for most to even bother.

On the market as a whole we were looking for a close above S&P 985 - finally got it yesterday but obviously no confirmation day today. Pathetically the S&P is having trouble even getting it's head over the 20 day - the previous year most resistance was at the 50 day moving average. At this stage we are not even making a serious run at that level. But we quickly approach the witching hour of 3 PM which in this market can mean a 3% move in 15 minutes. So within an hour we could be back over S&P 1000... why not. Or down at S&P 940.

Back to the foxhole.

Disclosure: No positions