US STOCKS HEAD FOR THE EXITS, FEW PARACHUTES AS WEAK RETAIL DATA REIGNITES RECESSION CONCERNS.

US EQUITIES fell on Wednesday after US retail sales posted consecutive monthly losses, offering an opposing view to the positive data that supported notions of economic recovery as consumers expressed their fears regarding the lagging indicator of employment by holding back significantly on purchases outside of necessities. The scope of the concern was made evident by the fact that the drop in April retail sales was higher on the core measure that excludes the high publicized automobile industry. Speaking of those Titans of capitalism (As I recall, the Titans lost and were confined to the center of the earth), negative equity sentiment was further “fueled” by General Motors and Chrysler announcing today that they would be closing 3000 dealerships in the United States. The dealerships would be primarily in urban areas, offering even greater challenges for municipalities with ever dwindling tax bases and vacant commercial real estate.

Retail stocks fell despite better than expected results from several large consumer product companies after the retail sales data was released. Financial and Technology stocks continued to struggle in the wake of continued new issues of stock in an effort to raise capital outside government and public sectors. Financials also fell as mortgage applications fell in the wake of higher interest rates for the first week of May. Drug stocks continued to buck the pullback in equities, as buyers took positions in defensive sectors. Realizations that the recession is still offering challenges and that certain elements of the global economic slowdown (employment for example) have not bottomed out yet.

Technically, June Dow Futures retraced through support of 8275 before closing slightly above this level. The market should continue to test support level, making an attempt to correct to 8228. Significant support remains in place at 8126. Upward recovery in the market should be capped out at 8420 for the near term.

EQUITY RANGES

OPEN

HIGH

LOW

CLOSE

CHANGE

DJM9 (JUNE DOW)

8320

8332

8235

8294

-142

SPM9 (JUNE S&P)

892.30

895.30

880.00

885.30

-21.50

NDM9 (JUNE NASDAQ)

1366.00

1366.00

1338.00

1344.25

-40.75