Beachcombing With the Insiders

It was another bad week for the market as investors continued to focus on economic and valuation worries that we've been highlighting weekly in InsiderInsights.

The poor retail sales figure for May (down 0.9%) apparently caught some pundits by surprise, but the real surprise to us is why anyone expected consumers to continue their torrid spending pace, given the highly indebted state of many consumers. This was one of the reasons we felt strongly about making bets against this market nearly two months ago, going long the Profunds UltraShort Fund and shorting SPDRs. And we are not closing these winning bets yet. Insiders are still flashing very bearish signals on the prospects of the overall market.

Most talking heads don't expect consumer spending stats to continue downward, but they now have to consider the possibility. It is well-known that the U.S. economic turnaround (and therefore, to some extent, the world's economic turnaround) owes quite a lot to U.S. citizens spending like there's no tomorrow. If this spending music stops, there is little else to carry on the tune of recovery. ...