Double your money as Sears gives away the store six months early.

Just how desperate are things going to get for American retailers? Waaayyy desperate.

We already know that the optimistic early reports regarding consumer confidence were way off the mark. Rather than the nice rise they were hinting, or even just a modest, flat run, we saw a plunge from 54.8 in May to 49.3 in June. This is a critical setback far beyond the net loss of 5.5 points, as it moves the index back into the negative zone below 50 (wherein consumers generally feel that things stink).

Personally, I was always rather suspicious of that May reading, as most of the raw data that the conference board supposedly considers was downright awful, and yet they managed to gin up a positive report that flew in the face of all evidence – and most all common sense.

Of even greater import, I saw that the pros – the big outfits and funds that move the market – weren’t buying it either. The sell signal was clear as day on the charts, so I told my readers at the time to short the dickens out of all of that misplaced optimism.

An Easy Target

In early June, Sears (SHLD:NASDAQ) was on a bit of a tear, having put on some 44 points since its nadir at $26.80 back in November of 2008. The same sell signal that was showing up in retail stocks in general was showing up in spades in the SHLD chart. This would be like shooting ducks in a barrel. (Or something like that. Not that I would ever shoot captive ducks – that would be wrong.)

Since that moment of giddy misplaced optimism, SHLD shares have fallen some 25%, and the options I recommended have gained more than 34%. But I truly do not believe this run is over in any way, shape or fashion.

There is, of course, all that economic overhang Justice and I have been discussing for the past few weeks. And the charts for both retail and SHLD continue to look downright miserable, indicating to my eye that Wall Street knows darn well both the sector and company are losers.

A Most Unsettling Offer

But, beyond all that, I have one unerring signal that tells me that Sears is totally screwed. But I have to forewarn you, it is so disgusting that it may turn your stomach.

The following is a link to Sears’ latest promotional effort: http://www.sears.com/shc/s/dap_10153_12605_DAP_Christmas+Lane?adCell=W3

They call it Christmas in July. And if you can stand the incessant, saccharine, synthesized holiday music that will hijack your PC (I couldn’t turn it off without shutting down my laptop), and eerie snow-covered cartoon landscape, you might discover that Sears is already offering massive discounts and free shipping to anyone who will “FOR GOD SAKES BUY SOMETHING NOW – Please?”

Better yet, don’t actually buy something. Just give them money, put it on layaway, and they’ll pony up your stuff in December. If they don’t go bankrupt first.

Did he say bankrupt? Oh yeah! Remember the last time someone promised you Christmas in July? It was GM, who subsequently borrowed billions from Washington before closing long-time dealers, welching on its debt, screwing shareholders and declaring bankruptcy. I figure those puts will be good for a double at the least.

A Gift You Can Really Use

Tell you what – I will show you how to find a genuine Christmas in summertime. This week I will be drawing up the list of charts I will review at Taipan’s Chicago conference. I will, of course, look into the overall situation for the S&P 100 (OEX), as well as gold and the U.S. dollar. I will also be digging into the various sectors looking for leading indicators for the rest of the year.

But if you e-mail me this week at alass@taipandaily.com, I will be glad to apply the same analysis I used on SHLD to some of the stocks or sectors of your choice and bring the charts to the meeting in August. Please keep in mind that I may get swamped as a result of this offer. So it’s strictly first come, first served. Also, I cannot give out individual investment advice. (That’s your broker’s sole preserve, so this info should be used only as generalized leading indicators as to the health of the market on the whole.)

In other words, if you ask me what you should do about your uncle’s 10 shares of Xerox, I’m going to ignore you. But if you want to know where manufacturing or oil or tech or such are headed, please write in and we’ll see about getting your chart up on the screen.

Other Related Topics: Editor Adam Lass , Retail Industry , WaveStrength Options Weekly

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