Are Department Stories Singaling a Recession in 2008?

Let me preface this by saying I have been a rabid bear on the retail names.

See:

1. A Lump of Coal This Christmas?
2. This Day in Retail
3. Retail Sales
4. And Here Comes the Reality Check in Retail
5. A series of posts about the dangers of Coach (COH)
   

With that said, these stocks have been terrorized. I don't follow this sector that closely but since I saw lulelemon (LULU) was being taken to the woodshed and this was a stock that was a momentum favorite I decided to review some other broader department store names last evening, and the charts blew me away. If stocks are truly harbingers of the future, 6 months out as many say, these charts should scare the heck out of you. I pulled up 3 major department stores - I excluded Saks (SKS) since it is target of a potential buyout so the stock is an outlier but look at JC Penney (JCP), Kohl's (KSS), and Nordstrom (JWN) - these stocks represent a good cross section of America from lower end department store, to middle to 'aspirational'. All are signaling it's ugly out there. With same store sales out tomorrow, one would think a tradeable bottom would be near; while not appropriate for my fund and its objectives - I'd assume they cannot go straight down to $0? Even in major down moves you should have a few strong (and violent) counter rallies. So I'd expect something of this sort in retail sooner or later. While home builders are dead to me, and financials have major structural issues along with "black box" (hiding the truth, lack of trust from investors) accounting - retailers simply have a slowing consumer. While I fear for the consumer, I still think Christmas will be Christmas and expectations have now gotten so low you might have a trading buy here soon.

With that said, that speaks to the stocks and trading... the bigger question is, what are these stocks telling us about the consumer in 2008? My take is they are confirming my thesis of the real inflation (people can't eat plasma TVs), lack of real wage growth, inability to extract equity from homes, growing disparity in incomes in this country among the wealthy and the 'rest of us', and constant pressure on the consumer I have been blogging about since August. This time it's for real - the consumer is in real trouble - he has forestalled all these realities in the past by using the house for ATM. Now, just as this has been taken away from him, he is getting the food inflation and further energy inflation - just imagine if refiners priced gasoline appropriately - gas should be >$4.25+ if $100 crude is 'truth' and not hedge fund speculation. If you don't believe me, look at these 3 charts, and argue this is a healthy consumer or one that's going to recover in 3 months. The more I sit and think about the situation, and the more the onion that is financials is peeled back, the more I think the slowdown in 2008 is going to be a lot worse than I originally imagined. And I already thought it was going to be quite bad. So much of what we 'create' in this economy is based on lending, and too much of the media if focused on the 'subprime' or lower borrowers - this is not a narrow problem - this is the entire middle class and now I contend much of the 'aspirational' lower upper class. All living above their means; 70% paycheck to paycheck. And now seeing the bills come in and losing places to turn to, to borrow to keep the juggling going.

Again, I'd expect some sort of dead cat bounce sooner rather than later in the retail stocks themselves; they can't go straight down - these are not post bubble tech stocks but you wouldn't be able to tell from the charts. Ugly. Very ugly.