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WOOF Consolidates

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Article by: www.wealthblueprintletter.com, 4/2/2015

VCA Inc. operates as an animal healthcare company in the United States and Canada. It operates through two segments, Animal Hospital and Laboratory. The Animal Hospital segment offers general medical and surgical services, as well as specialized treatments comprising advanced diagnostic services, internal medicine, oncology, neurology, endocrinology, ophthalmology, dermatology, and cardiology for companion animals; and sells related retail and pharmaceutical products. The Laboratory segment offers testing and consulting services in the areas of chemistry, pathology, endocrinology, serology, hematology, and microbiology, as well as conducts tests specific to particular diseases. As of December 31, 2014, it operated or managed 643 animal hospitals and 59 veterinary diagnostic laboratories. The company also provides communication and marketing solutions to veterinary practices, pharmaceutical manufacturers, and the pet owning community.

Take a look at the 1-year chart of VCA (Nasdaq: WOOF) below with added notations:

WBL WOOF

WOOF has been trading sideways for the last 2 months. Over that period of time the stock has formed a resistance area around $55 (red). In addition, the stock has also created an area of support at $52 (green). At some point the stock will have to break out of its current consolidation.

The Tale of the Tape: WOOF has levels of support at $52 and resistance at $55. The possible long positions on the stock would be either on a pullback to $52, or on a breakout above $55. The ideal short opportunity would be on a break below $52.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!
Christian Tharp, CMT
Follow me on Twitter: @cmtstockcoach

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Walmart Teams up With Shopify to Take on Amazon

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Walmart has forged an agreement with Shopify to help its third party marketplace improve its online presence and set its sights on online behemoth Amazon. By enlisting the help of Shopify, the retail giant plans to add 1,200 online sellers to its walmart.com store site and draw more online shoppers. Shopify helps sellers create a website and provides a shopping cart solution to provide an easier shopping experience. 

The market welcomed the partnership, as Shopify shares gained 5% and Walmart getting a slight uptick. Walmart is currently capitalizing on its recent success in online sales, which grew 74% during the first quarter. However, its growth came primarily from its third party marketplace rather than its first-party (direct purchase from suppliers) store. The deal with Shopify further strengthens the infrastructure for its third party marketplace. 

Walmart has embarked on a series of strategic moves to expand its e-commerce, recently purchasing Bonobos and Modcloth, and has recently announced a deal with resale firm ThredUp.

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Sorry AOC, Billionaires Haven’t Made $434B During Pandemic

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Sorry AOC, Billionaires Haven’t Made $434B During Pandemic

Nation’s Billionaire’s See Net Worth Jump $434B in First Two Months of Pandemic

It was an eye-opening headline, and fairly drew the frustrations of a lot of us. This is especially true for the 38+ million Americans who have lost their jobs since the coronavirus pandemic shut down. Our country has been at it a little more than two months ago.

How dare they get richer while we suffer?

Chuck Collins, director of the Institute for Policy Studies Program on Inequality, the co-author of the report, expressed his piece. He said, “The surge in billionaire wealth during a global pandemic underscores the grotesque nature of unequal sacrifice.”

Meanwhile, Frank Clemente, the executive director of Americans for Tax Fairness which co-authored the study, also shared his opinion. He said, “The pandemic has revealed the deadly consequences of America’s yawning wealth gap, and billionaires are the glaring symbol of that economic inequality.”

Democrat Alexandria Ocasio-Cortez didn’t want to miss the opportunity to inject her brand of socialism into the public discourse. “Really great system we got here. Can’t imagine why anyone would question how beneficial or sustainable it is for the working class,” she tweeted. This is in response to CNBC running the headline.

The Study’s Flaws

The top five US billionaires explicitly mentioned in the article are all Democrats. These include Warren Buffett, Bill Gates, Jeff Bezos, Mark Zuckerberg, and Larry Ellison. But setting that irony aside, the problem is that the article is simply dishonest, points out MarketWatch columnist Steve Goldstein.

“The study… examines billionaires’ wealth between March 18 — the rough start date of the pandemic shutdown, when most federal and state economic restrictions were in place — and May 19. It relied on the Forbes’ billionaire list, which itself is built around stock-market performance.”

The flaw, as Goldstein points out, is that the beginning and end dates used for the study are incorrect.

“Think about that in the market context. The pandemic did not start March 18 (nor, of course, had it ended on May 19), and certainly market concerns about the pandemic did not start March 18. Far from it.”

He says that to see a true picture of how much money the billionaires made – or lost – during the pandemic, they need to expand the date range.

“A more logical way to think about whether billionaires got richer, or not, is to think about the performance from the Feb. 19 peak in the market, after which more investors began to get concerned by the novel virus. You then get to see who got richer even in the face of the crippling economic blow.”

If you use this revised date range, Goldstein says the truth is that billionaires have actually lost money since the market peaked and the pandemic began

“Cumulatively, the top 50 billionaires lost $232 billion between the market’s peak and this Tuesday. If the remaining billionaires on the Forbes list lost wealth at the same roughly 12.5% rate that the top 50 experienced, that’s another $200 billion–plus wiped out.”

So while it’s easy to run a headline that bashes billionaires, the truth lies somewhere in the middle.

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American Consumers Will (Or Won’t) Drive The Economic Recovery

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American Consumers Will (Or Won’t) Drive The Economic Recovery

If you are wondering how the stock market has climbed nearly 30% from the March 23 lows while the country has lost 20 million jobs in April, you’re not alone.

It’s head-scratching to try and think of a scenario where stocks are worth as much or almost as much as they were back in February when the country had a 3% unemployment rate compared to 14.7% today.

A common refrain from analysts and Wall Street veterans is that the stock market is forward-looking. So everything bad happening today has already been priced in. Or perhaps with parts of the country slowly reopening, that the economy will quickly spring back to life. Maybe there’s justifiably a belief that no matter how bad things get, the Federal Reserve will step in and flood the market with liquidity, effectively removing any downside risk.

Consumers

Whatever the real reason is for the surge in stock prices since late March, there’s one thing that many analysts say will either spur the market higher or send it crashing back down to the March lows: you and me, the consumer.

“It’s all going to come down to consumer spending. If we’re all sitting inside and not out spending money in September-October, the market’s not going to like that — the market will go down,” said Scott Wren, senior global market strategist at Wells Fargo Investment Institute, in a recent interview.

Consumer spending accounts for roughly 65% of our country’s GDP. So if consumers don’t feel comfortable leaving their homes and getting back out to shopping centers, malls or restaurants, it’s going to be nearly impossible for a sustained economic recovery.

Richard Cordray was the first director of the Consumer Financial Protection Bureau. He says consumers “are likely to come out of the covid-19 crisis no longer able, or willing, to bear the same load as before. That means that Wall Street investors counting on ordinary families to continue propping up the business cycle are likely to be sorely disappointed.”

“First, the rapidly deteriorating job market will hurt consumers badly, and for many the damage will not be temporary. Until last month, unemployment was at historic lows: It was 3.5 percent in February. More hours worked meant more income for most families while pushing the wage curve higher. All that positive momentum is gone. Unemployment is certain to spike above 15 percent soon, and many small businesses that operate on thin margins will go bankrupt.

“Second, many businesses will not regain the same vigor because they are dependent on strong consumer demand. Inevitably, some Americans will remain unemployed longer than others. Those who go back to work quickly are still likely to emerge from their experience of sheltering at home with less ability to resume spending at the same levels. Large numbers of households are falling behind on major debt obligations, such as rent or mortgage payments, auto loans, and credit card bills. Even those who return to pre-crisis jobs will have to cope with the burden of this overhanging debt, which will constrain their discretionary spending for months or even years to come.

“Third, the wrenching experience of the covid-19 pandemic is likely to change many consumers’ behavior. As happened in the Great Depression, this crisis has reminded people of the fragility of their financial situations, making them more cautious about borrowing and spending. Social changes, too, are likely to linger. Until people feel sure about an effective vaccine and manageable treatment for the virus, they may be reluctant to travel or even to circulate as widely as they used to, producing lower levels of economic activity overall.”

The Effects of Job Loss

And Avi Dan, the CEO of Avidan Strategies, says the damage from the unprecedented job losses could last for years in what he calls “America 2.0”

“After most recessions had ended, consumers’ attitudes and behaviors often return to “normal” within a couple of years. This time it may be different. Given the unprecedented extreme events we are witnessing, consumers’ optimism just might be replaced by a heightened sense of economic vulnerability. Caution might replace consumerism, and this could persist for a decade or longer.

“Given these facts, there is a good possibility that consumer attitudes and behaviors, shaped during this recession, will linger substantially beyond its end, as we enter a new national phase, America 2.0. The majority of consumers may well retain the different consumption habits developed during the recovery with what they’ve adapted to during the recession.”

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