Retail Sales Confirm That Economy Is In Trouble - Twitter Already In A Bear Market

Just a quick "administrative" note first.  The homebuilder stocks took a big hit on Friday despite the massive ramp in the Dow/S&P 500.  At one point the homebuilder stock index was down 4%.  I have called a new bear market in housing when the DJUSHB (Dow Jones Home Construction index) hit 515 at the end of  January.  It's trading down another 1% today as I write this.  It's down 20% even from my call on January 29.  You can read about my call here:  Short The Housing Stocks.  That piece focuses on DR Horton and why that's a great short. You sort through my other articles to catch up on my housing market analysis.  I was a bit early on my call as the DJUSHB ran up to 550.  But that just means that the index has been in an even bigger bear market (the 20% decline rule) than measuring from when I made my initial call.  Then again, I was early in calling the demise of the first big housing bubble, but ultimately I proved to be 100% right.  History will repeat here, I assure you.

Also, I am still waiting to hear back from Pulte Homes' Jim Zeumer, who jumped all over my analysis of his company's accounting management techniques and responded promptly to my email replies. That is, all but the one in which I challenge he and his upper management team to take after-tax income cash from their bank accounts and buy a meaningful amount of shares if he was so confident that my work was wrong.  You see, PHM insiders sold copious amounts of stock all summer long and the company used $83 million shareholder money to buy back shares.  So why isn't management buying shares if they like the outlook for new home sales?  Please note, I don't expect to hear back from him and that was a strictly rhetorical question.  But I will say that it's always best to invest in companies/sectors where management is putting their money where their mouth is.  We are seeing that in a big way in junior mining shares.

So, retail sales are starting to decline on a week-to-week basis, which is contrary to the bullish headline year over year reports.  I wrote an analysis of retail sales for Seeking Alpha, which you can read here:  Retail Sales Tanking/Retailers Sending A Bad Signal.

It's incredible to me that these big retailers are going to open on Thanksgiving Day, starting with K-Mart opening at 6:00 a.m.  It's bad enough that Walmart started the trend years ago by opening at midnite on Black Friday.  But if you step back and think about what it means, it means that the retailers are fearful about the prospects for holiday sales this year.  Abercrombie & Fitch has already warned about their holiday sales expectations and The Gap is already heavily discounting.  That's about all you need to know because the cash register is where "the rubber meets the road" of truth - not media-hyped headlines and Wall Street financial tv "news" programs.

Twitter stock, which came public at an insanely high multiple of sales and is highly reminiscent of what happened of the top of the last internet stock bubble, actually hit bear market territory this morning as it traded over 20% below it's high price print on Thursday, the day it came public.  Of course, I'm sure CNBN, Bloomberg and Fox Biz will not report this fact...