Warning Shot for Stocks: Payroll Tax

Taken 2 - Liam Nesson

Wal-Mart sales slowing and retail sales numbers are down.  We've all been warned.

Mastery moved to 90% cash this week as we watched stocks continually bump up against but not push over the Dow Jones 14,000 mark.  Today we get news from Wal-Mart (WMT) that Feb. sales were a 'total disaster'.  The numbers for U.S. retail sales are also down.  Finally the impact of the Jan. Payroll Tax cut are being felt and it will soon make its way to Wall Street and our stocks.

We hate to be Negative Nancy's but these types of headlines just add more to what we've already said this week in Where will Stocks Go from Here?.  All the problems mounting for stocks can't be ignored and we believe its why the Dow won't cross 14,000 this month.  We would love to be wrong but the signs are pointing to a minor correction in stocks and we want you prepared. 

Bloomberg reported that Jerry Murray a VP of Finanace from Wal-Mart said in n email to other execs:

 In case you haven’t seen a sales report these days, February MTD sales are a total disaster...The worst start to a month I have seen in my ~7 years with the company. 

Wal-Mart (WMT) shares are down 2.4% today on the news.  That's a big warning shot Fellow Masters.  If things aren't good for Wal-Mart then expect other retailers to follow suit.

U.S. retail sales inched up 0.1% last month from December, after gains of 0.5% in each of the prior two months. Now that we all are 2% poorer via the payroll tax cut we all have less to spend.  This isn't a big story yet and maybe it will blow over.  However if the media continues to remind us that our economic worries are not over and it all comes back to haunt us expect the selling to ensue.