How (and Why) to Ignore Talking Heads and Enjoy Your Coffee Instead

The retail earnings this week are the perfect example...   How (and Why) to Ignore Talking Heads and Enjoy Your Coffee Instead By Matthew Carr, Chief Trend Strategist, Tactical Trend Investor Hey Reader, I love the mornings. In particular, I love those hours long before the sun is up – when the early birds are still rubbing the sleep from their eyes and the worms are still safely tucked away in their beds. That’s when I do my best thinking. It’s also when some of my most profitable trading strategies are born. When I was young, I worked the graveyard and opening shifts. I’d get home from work when everyone else was heading off to theirs. Or I was on the road to clock in when everyone else was walking in their front doors from closing down the clubs. I loved it. The world is quiet and peaceful in those moments. It can be strange because you often find yourself an observer, looking in at a society that you’re slightly out of sync with. But what you’re able to see so clearly in those periods is the rhythm of life jolt into motion each day. The first customers through the door each morning are the same faces… The slow build up from silence to chaos is unchanged… The wind down to nothing as the lights blink out one by one is as reliable as the sunset… You come to realize the world moves in these rhythms from morning to night, from Monday to Friday, Saturday to Sunday, week to week, month to month, and season to season. These rhythms are the pistons of the economy in action – consumer dollars flying from wallets, purses, and money clips in these same repeating patterns. But what always strikes me as funny is how often people forget these rhythms exist. That’s such a pity because if they didn’t, it’d save them so much stress… especially in the markets.   [The Fastest Profits We’ve Ever Seen]( See how Kenny Glick ignores market catastrophes to hunt [rare, outsized homeruns like 650% in one day, 700% in 6 hours, & a once-in-a-lifetime 2400% in 4 hours.](   A Rhythmic Nation Ignored On Monday, I outlined what to expect from the market and monthly retail sales. What played out is exactly the pattern I shared. But this IS the week of retail, so we’ll stick with this theme. Beyond those monthly sales figures, we hear earnings from discount and big box retailers such as Home Depot (NYSE:HD), Target (NYSE:TGT), TJX Companies (NYSE:TJX), Ross Stores (Nasdaq:ROST), and Walmart (NYSE:WMT). I’m not going to bother breaking down expectations. There’s no need. Plenty of other people are racing to do so. Instead, what I’m going to show you is more important than accounting figures. Because what I’m going to show you is the rhythm to those consumer dollars… the same rhythm that – if you remember it – you can exploit for gains like clockwork! Naturally, you’re going to hear all the hubbub about retail earnings in the coming days. Analysts will hem and haw over what it signals about the overall economy… yada, yada, yada… a bunch of boring stuff lacking any real insight. I’ll go ahead and tell you now… most retailers are going to disappoint. And the majority of their shares are going to drop. In fact, Home Depot already has – and its shares already have. Inflation and fears of an economic slowdown are the boogeymen du jour for retailers. And they’ll earn more than their fair share of airtime during corporate conference calls and broadcasts where every “expert” with a pulse breathlessly exclaims, “This isn’t good!” But what those analysts and other talking heads won’t tell you is that first-quarter sales disappointed last year… and the year before that… and the year before that… and they did in 2015, 2011, 2008, 2007, 2002, and 2001 ad nauseum. It’s always something this time of year – only the specific culprit changes. Remember, life moves in rhythms. Your day – your routines – are the same. Humans are creatures of habit often out of necessity. And to be a successful trader, what you need to do is recognize these patterns. Yes! Sell in May! It’s because of these rhythms – tactical trends – that retail is my favorite sector to fish for opportunities each year. But I fish with extreme caution because the performance that my proprietary TTI retail index from May to October illustrates gives me pause this time of year. This chart is a sea of red. Over the course of 23 years, this index of 25 retail companies has only seen gains between May and October nine times. That’s a success rate of 39.13%.... which is great if you’re a major-league baseball batter. If you’re an investor – which you are – that’s terrible. And the average return is negative. In fact, half of the TTI retail index’s components have an average negative return from May to October going back more than two decades. Another eight average returns less than 2% during this span. You want a headline to remember? Retail stinks this time of year! And when it comes to retail, the Wall Street maxim, “Sell in May and don’t come back till Labor Day” actually applies. It’s one of the cardinal rules of tactical trend investing. Unfortunately, the rest of the world forgets it every single year… except me and you, my reader. We recognize this rhythm – this pattern of spending – and use it to our advantage. That means while everyone else is freaking out, we’re living carefree lives. We’re collecting profits from puts on retailers this time of year or focusing our attention on more lucrative sectors. Best of all, we understand that the more retail shares fall now… the better value they’ll be later. Because the TTI retail index averages a 16.96% return with a 73.9% success rate from October to May. We’ve just got to wait for the right season. That’s the advantage of a tactical trends approach. It’s also the easiest path to ignore Wall Street’s talking heads and simply enjoy your morning coffee instead. Your tactical trend hunter, Matthew   You are receiving this e-mail at {EMAIL}, as part of your subscription to Inside Money Morning. To remove your email from this list, [unsubscribe here](. Please do not reply to this email as this address is not monitored. 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