While I hate to be the bearer of bad news, something is suddenly happening in the luxury high-end consumer market that stock analysts and economists have failed to pick up on.

Coach, Inc. (NYSE/COH), a seller of high-end leather handbags and a stock I follow closely to monitor consumer spending patterns on luxury items, yesterday reported that it made $303 million in its latest quarter on $1.26 billion in sales. Same-store sales climbed 13% and the company announced a $1.5-billion stock buyback program.

Looking at Coach’s results, one would think the luxury high-end consumer is back to his/her 2007 spending habits and that the luxury market is back big-time. But one thing is terribly wrong with this picture. Even though Coach’s sales were strong, even though they beat analyst expectations and even though they are buying their stock back because management believes it is such a great deal, the stock is quickly moving down in price.

Coach’s stock reached a 52-week high of $58.55 in mid-December 2010. Since then, the stock has been coming down. In fact, it’s down 9.3% since then to $53.09. We all know January has been great for stocks, with the Dow Jones Industrials up 3.5% in January, so why is a high-end luxury company (with great earnings) seeing its stock price decline?

Well, Coach is not alone. If we look at the stock of Tiffany & Co. (NYSE/TIF), the high-end retail store operation, we see the same picture: Tiffany’s stock traded at $65.76 in mid-December 2010. Despite better than expected earnings from Tiffany as well, Tiffany’s stock is down 11% since mid-December to $58.60 today.

Hence, we have two bellwether consumer luxury item retailers down about 10% in the past four to six weeks, while the stock market continues to rally. In my opinion, the price action of these stocks smells of trouble ahead.

I’m a big believer in stock prices being a leading indicator. And if I didn’t know better, I’d say that the price action of these two stocks is telling us that the high-end consumer market will suddenly be cooling spending in the months ahead—something very few analysts and economists are predicting today.

Another signal of a market top coming and economic trouble ahead? Unfortunately, that is what the price action of these two well-known luxury brand stocks are telling us.

Michael’s Personal Notes:

Words of wisdom released Monday from my highly respected colleague, Robert Appel:

“We get that, after some 10 years of anguish, readers want to hear good news, but unfortunately we have a policy of telling the truth, at least as we see it. Stocks are holding up only because Mr. Bernanke has prioritized the market as against all other asset classes. Bully for him.

Gold is consolidating for a time — we did call this for you, but this too shall pass…and provides an opportunity to increase positions.

A lot of potential bad news is on the way. This includes Euro debt, the collapse of bonds, unsold inventory in housing that is not being disclosed, the collapse of cities and states, massive food inflation, general inflation, and more unpredictable weather. There could be a major heat wave this summer — which will additionally interfere with the growing cycle.

And labor unrest — the working man is actually the “canary in the mineshaft;” he is told by the media that there is no inflation, but he knows precisely what it costs him to feed and care for this family. The news should hit no later than late spring.”

In specific to gold bullion, Appel says:

“There are no absolutes here. In 2010, we saw the gold complex take what we called the ‘Death of a Thousand Cuts’ over a period of many months before rocketing in the fall, and making a lot of money for our readers. The year 2011 is NOT going to follow that pattern, we think. There appears to be the fast pushing of a negative pall (down move) over the entire gold/silver market which will drive away all but the most determined and act as the setup for a much bigger up push to come.

We still expect $2,000 gold by next year and remind you that, unlike many others, we have never talked to you about $5,000 or $10,000 or $20,000 gold because the powers that run the world would sooner have a collective root canal than allow that to happen. But $2,000 gold in very doable and would reward those nations (Russia, China) that have been accumulating, while Britain and the U.S. have been dumping.

In the meantime, watch the $1,265-per-ounce level, which should provide an interesting test of a local bottom, while at the same time being enough of a drop from the $1,400-plus range to mystify the weak traders who will, by then, be hiding under their beds.”

Where the Market Stands; Where it’s Headed:

The Dow Jones Industrial Average opens this morning up 3.5% for the year. There is no doubt about it; stocks are off to a great start in 2011. I’ve been writing in these pages throughout December 2010 and January that, in the immediate term, stocks would rise. And that is exactly what has been happening. Dow Jones Industrials 12,000, here we come.

But the air of optimism is getting too thick for me. Last night, when I was listening to President Obama’s State of the Union address, the President made specific mention of the stock market “being back up.” Too many investors and analysts are turning bullish. While we may be a few weeks away still from a market top, the bullishness I see amongst market participants is characteristic of the type of investor sentiment we see when the stock market is topping out.

What He Said:

“You’ve been reading my articles over the past few months and have seen how negative I’ve become on the U.S. economy. Particularly, I believe it’s the ramifications of the faltering housing sector that are being underestimated by economists. A recession doesn’t take much to happen. It’s disappointing that more hasn’t been written on the popular financial sites and in the newspapers about the real threat of a recession happening in 2007. I want my readers to be fully aware of my economic opinion: I wouldn’t be surprised to see the U.S. economy in a recession sometime in 2007. In fact, I expect it.” Michael Lombardi in PROFIT CONFIDENTIAL, November 13, 2006. Michael was one of the first to predict a U.S. recession, long before Wall Street analysts and economists even thought it a possibility.