The JB Hi-Fi Chart Doesn’t Suggest a lot of Belt Tightening

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JB Hi-Fi Share Price - ASX JBH

Last week the ABS gave us an update on the Aussie consumer.

Here’s the headline from the Australian Financial Review, and how they put it…

‘Retail sales smash expectations’

Seasonally adjusted retail sales surged 0.9 per cent in November – the strongest growth in two years and well ahead of economist’s expectations for just 0.4 per cent growth.

The strongest consumer growth in two years. Who would’ve seen that coming?

See, this is not really news. Not to the market anyway.

If you get nothing else, you have to understand this…

What you read in the press is old news to the market.

And here’s one more example that highlights what we mean.

JB Hi-Fi Ltd [ASX:JBH] completed the acquisition of the Good Guys back in the latter half of 2016. That also brought in home appliances under their umbrella.

Combined, these stores represent a fair slice of the Australian retail market. And give you a good look at how the Aussie consumer might be faring.

So let’s bring up the chart. What’s it say about the Aussie consumer?

Port Phillip Publishing

[Click to open in a new window]

Well, it says plenty. And doesn’t suggest a whole lot of belt tightening is going on.

Now…

Towards the end of last year you could’ve read amply on the Aussie consumer. And how an Australian recession was imminent.

And that’s not to totally discount those writings. At the time there was a lot of uncertainty because of the trade war.

But…

When a chart like JB Hi-Fi is busting into all-time highs, you just can’t call an imminent recession with any degree of confidence.

The chart was telling you months ago that consumer spending was up. Or, at least holding steady. You don’t need to read that in the press months later.

See how the chart sets you free?

So, when making investment decisions based on what you read. Or, on the opinions of others. Always bring up a relevant chart.

And if the chart is at odds with what you read, then somehow, someway, you have to put that writing aside. And psychologically, it’s not always easy to do.

Always choose to follow the weight of money. That usually puts you on the right path.

What now for JB Hi-Fi?

Well, you’ve got to pick your moments. On the monthly chart the share price looks extended. There’s probably not a lot of meat left in the sandwich right now.

But the company will report their half-year results in February, so here’s a forecast…

They’re very likely to report growth in sales and net profit, when they report. Let’s wait and see.

Anyway, if you want to keep up to date on what’s happening in markets and a whole lot more, you can subscribe to the Profit Watch newsletter here.