Do These Charts on ULTA Lie?
One stock is rocketing higher - the stock chart looks great… until you zoom out… keep reading for more on Ulta Beauty (ULTA).
But first…
Get Ready for Chaos…
Honestly, as if we don’t have enough to worry about these days… the housing market is facing some big changes.
No, I’m not talking about interest rates or home values (although those are crazy big problems)...
I’m talking about the recent supreme court ruling about realtor commissions.
Traditionally the seller of a house paid a commission - and that commission was split between the selling broker and the buying broker.
What many home sellers didn’t realize was the rate they paid was negotiable… and the National Association of Realtors (NAR) was improperly incentivising brokers to show certain homes over others based on commissions!
Shocking… just shocking that an organization would optimize for higher revenue at the expense of the consumer… I’m just shocked…
“As part of the settlement, the NAR agreed to no longer require a broker advertising a home for sale on MLS to offer any upfront compensation to a buyer’s agent.”
What’s this mean?
If you sell a house, you’re not forced to pay the buyers commission.
What’s crazy is the changes take effect this week, and many realtors I know are already worried about the impact. One realtor won’t show a home to a buyer without an EXCLUSIVE contract guaranteeing them a commission.
How might this play out?
I’m not sure… but I expect some Chaos and some interesting stories will certainly arise.
One of the big reasons housing is watched so closely is because it’s part of…
The CPI Numbers.
Did you watch the CPI numbers yesterday like I said?
CPI was a robust 2.9% year over year.
Is that low enough for the FED?
Who knows! The number wasn't strong or weak… but exactly as expected.
Only time will tell if the Fed thinks it’s ok to lower rates.
Honestly, I’m on the fence for the September rate cut. A lot of people expect it… but remember 2.9% CPI is well over the Fed’s target of 2% inflation.
Regardless - hold onto your hats as the news from the Fed will certainly shake the markets over the next few weeks.
Walmart’s Announcement
I told you to keep an eye on Walmart (WMT).
They announced earrings this morning.
Earnings were great - they beat on revenue they beat on EPS - The stock is trending up… on the strength of the call!
Even better, management said they don’t see any weakness in the consumer spending trends in their stores. It’s great news for the economy and consumer… or is it?
Here’s my, “Let’s look at this from a different angle”... angle…
Walmart is known as a low cost retailer.
Others are seeing tightness in consumer spending, just look at recent announcements from:
Dutch Bros (BROS), Lamb Weston (LW), McDonalds (MCD), and Hershey's (HSY).
Maybe we’re seeing consumers trade down to purchase at Walmart because the pinch of higher prices is just too much. That’s why Walmart is seeing strength… and the economy is much weaker than expected.
Conspiracy theorists - preach!
Now this is a chart to look at…
HOW STOCK CHARTS LIE…
OK, buried in the news yesterday was the update on what genius investor Warren Buffett owns.
Recently he’s been a big seller of stocks… selling $77 billion and just buying $1.3 billion.
The big sale was Apple (AAPL). He top ticked that trade!
Anyway, the big purchase was Ulta Beauty (ULTA)...
Just look at this stock chart… As I write this - the stock is rallying almost 15%
Source Stockcharts.com
You think it’s an amazing move based on the chart, right?
Well look again - that stock chart is a total and absolute LIE…
ULTA is down 42% from it’s 52 week high… and down 32% form the start of the year. The stock is ugly.
Might this be the bottom for ULTA?
Maybe… but you can never know for sure. In my humble opinion, a stock chart like this indicates there might be problems with the business. What’s to prevent it from falling further?
Source Stockcharts.com
Let me ask you… Would you put your hard earned money in this stock?
Reply to the email I sent you, and let me know…