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On Wednesday's we monitor and model sequential rates of change based on both the MBA Mortgage and ABC/WashingtionPost Consumer Confidence #'s. Both were disappointing again this week.

After showing an aberrational 1 week spike higher last week, the MBA mortgage applications reverted back to their negative "Trend" line, coming in -4.4% week over week. Meanwhile the ABC report came in at -44 versus -45 last week, continuing to "Trend" along the bottom of all its time lows.

Wall Street thinks the worst of the US Consumer has been discounted. I disagree. I think Q3 will be revealed as one of the worst in recent memory. After 64 consecutive quarters of positive US Consumer Spending, this is going to be a critical inflection point.

Consensus is Bearish. In my model of 3 positions (Bullish, Bearish, and Not Enough of one or the other), the Street is NOT Bearish Enough.

I have next support for the MVRX (Morgan Stanley Retail Index) at 137.19.
KM

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