Retail. Is. Alive.
For those in my LIVE Trading Room, they KNOW how bullish I have been the past few months in the Retail space – not just on oversold retail Apparel, Big Box and Automotive plays but extremely oversold apparel accessory plays: LB, ANF, URBN, GES, GPS, AEO. Most recently I even initiated swing longs in M and JWN, actual retail store plays, which I suspect will become trend longs.
This is on top of swing trading WMT, COST, TGT actively long, all the while not once trading AMZN.
In fact, I have had my best string of earnings plays–10 baggers as the cliche goes–in XRT plays: from the EXPE overnight short for EPS to trend long LB for two months now. I have been crazy about oversold auto retailers too: another 800% was made on AAP for an EPS play plus swing longs in ORLY and AZO. From specialty retailer OSTK swing long for $20 to shorting W for $20. And I’m not even talking about Chinese retail chases BABA, JD, WUBA which we have traded actively in the room as well.
My point: I have never traded retail as much as I have the past few months and I don’t think this theme is done. I think the trend reversal in out-of-favor, ‘Amazoned’-retail plays has just started to get attention and why not? With the FAANMG momentum plays way oversubscribed, value managers have to invest somewhere. There is value in select retail plays.
What drove my interest? The combination of technical oversold chart patterns combined with ridiculously cheap calls (relatively speaking to themselves historically and to puts post long downtrend) and just plain old book value/fundamental assessment. Just the other day, my sentiment ‘proof’ appeared in a tweet that also displayed actual demand too. Clearly, we were ahead of the trend. Now that it’s popular, will it really gain institutional buying?
Here’s one hedge fund/value manager very keen on the space. And apologies: I completely missed EXPR and HIBB.
$HiBB continues to soar – listen to @Lemelson discussing @LemelsonCapital major commitment in the company on August 25 and November 10 2017 here: https://t.co/rgeCTbagXi includes commentary on $AEO, $EXPR, $GES and $DPZ
— Lemelson Capital (@LemelsonCapital) November 20, 2017
(PS. Father Emmanuel and I both deem DPZ an ‘Air Pocket Stock’ but that’s another post.)
Speaking of Air Pocket Stocks: SIG is on my Top 20 list for overvalued plays. That may sound funny since SIG was down 50% before it fell 30% today after badly missing earnings this morning. So not all retail is long…but there are a lot of oversold, undervalued retail plays in my opinion that can continue higher.
Moving forward, I am very excited about launching the Trade Alert service 1st of December so you will be able to check these positions and judge for yourselves. I have been talking for months about how I expected Retail to shine in Q4 and it’s not even half way over!