Here's a comparison of two sectors that have high and low ticket items. Below is a chart of Ford, GM and a major auto supplier Lear. Ford and GM are both down approximately - 40% and Lear is down around -18% this year alone. These are companies that sell high priced items to the consumer, or provide items to the auto industry as Lear does.
Copper a leading economical indicator is down - 27.63%, as shown by the the copper ETF (JJC). Copper is used in just about any large scale building including auto and homes.
Not to show just bearish looking charts, below is a nice looking chart of stocks that cater to people looking for low cost items and food. McDonald's, Dollar General, Dollar Stores, and Walmart all fit this category and are all higher for the year with Dollar General up 28%.
So what we have is a tale of two industries. Car manufacturers and anything heavy duty including copper has been sold off hard which is expected in a struggling economy. McDonald's, where you can feed a family of four for around $20.00 and the $1 dollar stores have seen their stocks appreciate this year.
Bottom Line: Monitoring charts like these can be helpful in determining the mindset of the consumer. Is the consumer still pulling back and staying away from high priced ticket items and continuing their cost conscious ways by visiting the economical low cost stores, or have they opened up their wallets to higher ticket items that have a longer term obligation to pay off. For now, the consumer is extremely risk averse with their purchasing habits. I would expect those charts to reverse when the economy starts a recovery. A potentially good trade would be to go long the autos manufacturers and sell short the low cost providers when the economy does rebound.
