Week 50 Performance...where did the Santa Claus go?

It was yet another painful week for the fund as we dropped 4.9% vs. the previous week led by Green Mountain and Owens Illinois to the downside.  GMCR's brewer purchase commitments, a leading indicator of anticipated demand, declined 43% for the calendar year-to-date through September and 64% in the second half of its fiscal 2011 year.  This was subsequently followed by a research report from Stifel Nicolaus & Co. note, which said demand for Keurig brewers is on the decline, with imports of the coffee-making machines down 28% in November after being up 44% through the first nine months of 2011.  We went from being up 1.4% to down 21.5% this past week.  So goes the story of being in a momentum stock.


The market from a technical market has been breaking down since the beginning of the month.  We missed our opportunity to get out of some positions such as GMCR as noted above and although the market is down it isn't down enough to start positions that are on our watch list.  I fully expect the market to muddle along for the rest of the year, possible get a Santa Claus rally this week and into the last week of the trading year and once we flip the calendar to 2012 a down market to continue.  


I'm already seeing and reading stories on how retailers are extending hours going into these last few shopping days until Christmas.  For example Toys R Us has announced they will be open 112 hours straight until 10PM on Christmas Eve.  Ever since Black Friday which seems to set a record every year, consumers have yet to return to the stores.  To draw them back in expect retailers to cut prices to entice shoppers back in which will lead to margin erosion and possible earning misses in the Q1 2012.