{"id":13161,"date":"2012-08-13T00:08:51","date_gmt":"2012-08-13T07:08:51","guid":{"rendered":"http:\/\/drduru.com\/onetwentytwo\/?p=13161"},"modified":"2012-08-13T00:08:51","modified_gmt":"2012-08-13T07:08:51","slug":"sifting-through-rubble-of-retail-high-flyers","status":"publish","type":"post","link":"https:\/\/drduru.com\/onetwentytwo\/2012\/08\/13\/sifting-through-rubble-of-retail-high-flyers\/","title":{"rendered":"Sifting Through the Rubble of Retail High-Flyers for Potential Trades &#8211; Long and Short"},"content":{"rendered":"<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on August 6, 2012. <a href=\"http:\/\/seekingalpha.com\/article\/783351-sifting-through-the-rubble-of-retail-high-flyers-for-potential-trades-long-and-short\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>The HOLDRS Retail ETF (RTH) made new all-time highs in late July, and the SPDR S&#038;P Retail ETF (XRT) has remained in a trading range since failing a retest of its all-time highs in late April.<\/p>\n<p><center><br \/>\n<figure id=\"attachment_13263\" aria-describedby=\"caption-attachment-13263\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_RTH.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_RTH.png\" alt=\"RTH trading near all-time highs\" title=\"RTH trading near all-time highs\" width=\"500\" height=\"350\" class=\"size-full wp-image-13263\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_RTH.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_RTH-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13263\" class=\"wp-caption-text\">RTH trading near all-time highs<\/figcaption><\/figure><br \/>\n<br \/>\n<figure id=\"attachment_13265\" aria-describedby=\"caption-attachment-13265\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_XRT.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_XRT.png\" alt=\"Daily chart of XRT shows stock has firm support although trading slightly down from its all-time highs\" title=\"Daily chart of XRT shows stock has firm support although trading slightly down from its all-time highs\" width=\"500\" height=\"350\" class=\"size-full wp-image-13265\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_XRT.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_XRT-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13265\" class=\"wp-caption-text\">Daily chart of XRT shows stock has firm support although trading slightly down from its all-time highs<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>While these strong performances represent hopeful signs for the consumer, I took great interest in the number of high-profile consumer\/retail-related stocks that experienced awful performances in this summer&#8217;s earnings cycle. {snip}<\/p>\n<p><strong>Bed, Bath and Beyond<\/strong> (BBBY)<br \/>\nBBBY initiated the series of high-flyer shockers with an unusual 17% post-earnings drop on June 21. Perhaps it was a sign and a warning. {snip}<\/p>\n<p>Interestingly, the market was not consoled by BBBY&#8217;s insistence it would stick with is full-year guidance&#8230;{snip}<\/p>\n<p>This disappointment represents the opportunity. The minute the market regains its confidence that BBBY will hit that target, the stock should begin its full recovery. In the meantime, BBBY has been a great range-bound trade whether you are bearish or bullish. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_13291\" aria-describedby=\"caption-attachment-13291\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_BBBY.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_BBBY.png\" alt=\"BBBY idles in a neat trading range just below 200DMA resistance as investors await follow-up to the post-earnings drop\" title=\"BBBY idles in a neat trading range just below 200DMA resistance as investors await follow-up to the post-earnings drop\" width=\"500\" height=\"350\" class=\"size-full wp-image-13291\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_BBBY.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_BBBY-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13291\" class=\"wp-caption-text\">BBBY idles in a neat trading range just below 200DMA resistance as investors await follow-up to the post-earnings drop<\/figcaption><\/figure><br \/>\n<br \/>\n<figure id=\"attachment_13292\" aria-describedby=\"caption-attachment-13292\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_BBBY-weekly.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_BBBY-weekly.png\" alt=\"The recession woke BBBY out of a long slumber that trapped the stock in a trading range for much of the last bull market\" title=\"The recession woke BBBY out of a long slumber that trapped the stock in a trading range for much of the last bull market\" width=\"500\" height=\"350\" class=\"size-full wp-image-13292\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_BBBY-weekly.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_BBBY-weekly-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13292\" class=\"wp-caption-text\">The recession woke BBBY out of a long slumber that trapped the stock in a trading range for much of the last bull market<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p><strong>Nike<\/strong> (NKE)<br \/>\nWhen Nike stunk up the joint a little over a week after BBBY, I think the market shifted into high alert on consumer-related stocks. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_13286\" aria-describedby=\"caption-attachment-13286\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_NKE.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_NKE.png\" alt=\"Nike struggles to hold on to a post-earnings recovery\" title=\"Nike struggles to hold on to a post-earnings recovery\" width=\"500\" height=\"350\" class=\"size-full wp-image-13286\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_NKE.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_NKE-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13286\" class=\"wp-caption-text\">Nike struggles to hold on to a post-earnings recovery<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_13287\" aria-describedby=\"caption-attachment-13287\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_NKE-monthly.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_NKE-monthly.png\" alt=\"Nike just does it over the long haul\" title=\"Nike just does it over the long haul\" width=\"500\" height=\"350\" class=\"size-full wp-image-13287\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_NKE-monthly.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_NKE-monthly-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13287\" class=\"wp-caption-text\">Nike just does it over the long haul<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>{snip}<\/p>\n<p>In the meantime, Nike is doing penance for the crime of <a href=\"http:\/\/www.businessweek.com\/news\/2012-06-28\/nike-profit-trails-estimates-on-increasing-costs\" target=\"_blank\">an earnings decline &#8211; the company&#8217;s first since 2009&#8230;{snip}<\/p>\n<p>I am sure cautious commentary on China further hurt sentiment:<\/p>\n<p>{snip}<\/p>\n<p><strong>Chipotle Mexican Grill<\/strong> (CMG)<br \/>\n{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_13266\" aria-describedby=\"caption-attachment-13266\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG-weekly.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG-weekly.png\" alt=\"CMG has had an extremely strong post-recession run\" title=\"CMG has had an extremely strong post-recession run\" width=\"500\" height=\"350\" class=\"size-full wp-image-13266\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG-weekly.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG-weekly-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13266\" class=\"wp-caption-text\">CMG has had an extremely strong post-recession run<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_13267\" aria-describedby=\"caption-attachment-13267\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG.png\" alt=\"Buyers seemed to finally get interested in CMG over the past two days. Looks like a bottoming underway.\" title=\"Buyers seemed to finally get interested in CMG over the past two days. Looks like a bottoming underway.\" width=\"500\" height=\"350\" class=\"size-full wp-image-13267\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13267\" class=\"wp-caption-text\">Buyers seemed to finally get interested in CMG over the past two days. Looks like a bottoming underway.<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>CMG&#8217;s crime? Rising food costs (especially thanks to the drought), falling same store sales, and looming competition from Yum!&#8217;s Cantina Bell (see &#8220;<a href=\"http:\/\/seekingalpha.com\/article\/739531-chipotle-due-for-a-serious-correction-part-ii\" target=\"_blank\">Chipotle Due For A Serious Correction: Part II<\/a>&#8221; for more details)&#8230; {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_13268\" aria-describedby=\"caption-attachment-13268\" style=\"width: 506px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG-ShortInterest.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG-ShortInterest.png\" alt=\"Surprisingly, shorts were not ramping up into CMG&#039;s earnings disaster\" title=\"Surprisingly, shorts were not ramping up into CMG&#039;s earnings disaster\" width=\"516\" height=\"449\" class=\"size-full wp-image-13268\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG-ShortInterest.png 516w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_CMG-ShortInterest-300x261.png 300w\" sizes=\"auto, (max-width: 516px) 100vw, 516px\" \/><\/a><figcaption id=\"caption-attachment-13268\" class=\"wp-caption-text\">Surprisingly, shorts were not ramping up into CMG&#039;s earnings disaster<\/figcaption><\/figure><br \/>\n<strong>Source: <a href=\"http:\/\/www.nasdaq.com\/symbol\/cmg\/short-interest#ixzz22gct4gTB\" target=\"_blank\">NASDAQ short interest<\/a><\/strong><br \/>\n<\/center><\/p>\n<p><strong>Starbucks (SBUX)<\/strong><br \/>\n{snip}<\/p>\n<p>The crime? SBUX guided Q4 AND fiscal-year 2013 earnings below consensus despite reporting an eleventh consecutive record quarter for earnings in its third quarter. <a href=\"http:\/\/seekingalpha.com\/article\/754831-starbucks-ceo-discusses-f3q12-results-earnings-call-transcript?part=single\" target=\"_blank\">SBUX openly talked about economic headwinds as it described the aggressive steps it will take to &#8220;navigate&#8221; the storm<\/a>&#8230;. {snip}<\/p>\n<p><strong>Coach<\/strong> (COH)<br \/>\n{snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_13272\" aria-describedby=\"caption-attachment-13272\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_COH-weekly.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_COH-weekly.png\" alt=\"Coach has had a strong post-recession run\" title=\"Coach has had a strong post-recession run\" width=\"500\" height=\"350\" class=\"size-full wp-image-13272\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_COH-weekly.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_COH-weekly-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13272\" class=\"wp-caption-text\">Coach has had a strong post-recession run<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>While COH is a well-managed, international business, it is not immune to macro-economic issues. As the chart above shows, COH peaked ahead of the last recession in April, 2007. This top occurred six months before the S&#038;P 500 peaked for the last bull market. I am guessing that now anytime COH speaks about macro-economic issues, the market pays very close attention. {snip}<\/p>\n<p><center><br \/>\n<figure id=\"attachment_13285\" aria-describedby=\"caption-attachment-13285\" style=\"width: 490px\" class=\"wp-caption aligncenter\"><a href=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_COH.png\"><img loading=\"lazy\" decoding=\"async\" src=\"http:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_COH.png\" alt=\"The post-earnings sell-off maintains the 50DMA as firm resistance\" title=\"The post-earnings sell-off maintains the 50DMA as firm resistance\" width=\"500\" height=\"350\" class=\"size-full wp-image-13285\" srcset=\"https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_COH.png 500w, https:\/\/drduru.com\/onetwentytwo\/wp-content\/uploads\/2012\/08\/120803_COH-300x210.png 300w\" sizes=\"auto, (max-width: 500px) 100vw, 500px\" \/><\/a><figcaption id=\"caption-attachment-13285\" class=\"wp-caption-text\">The post-earnings sell-off maintains the 50DMA as firm resistance<\/figcaption><\/figure><br \/>\n<\/center><\/p>\n<p>The crime? COH reported same-store sales growth in the U.S. of 1.7% down significantly from the 10% a year ago. A &#8220;promotional environment&#8221; in North America slowed growth in factory stores and forced COH to fight back with its own increase in couponing. This promotional environment will extend into the guidance period:<\/p>\n<p>{snip}<\/p>\n<p>Despite these warnings, I do not see anything fundamentally wrong with COH&#8217;s business. {snip}<\/p>\n<p>{snip}<\/p>\n<p>Be careful out there!<\/p>\n<p><strong>(This is an excerpt from an article I originally published on Seeking Alpha on August 6, 2012. <a href=\"http:\/\/seekingalpha.com\/article\/783351-sifting-through-the-rubble-of-retail-high-flyers-for-potential-trades-long-and-short\" target=\"_blank\">Click here to read the entire piece<\/a>.)<\/strong><\/p>\n<p>Full disclosure: long calls in SBUX, CMG; long SBUX puts; short NKE; long AMZN<\/p>\n","protected":false},"excerpt":{"rendered":"<p>(This is an excerpt from an article I originally published on Seeking Alpha on August 6, 2012. Click here to read the entire piece.) The HOLDRS Retail ETF (RTH) made new all-time highs in late July, and the SPDR S&#038;P Retail ETF (XRT) has remained in a trading range since failing a retest of its &#8230; <a title=\"Sifting Through the Rubble of Retail High-Flyers for Potential Trades &#8211; Long and Short\" class=\"read-more\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/08\/13\/sifting-through-rubble-of-retail-high-flyers\/\">Read more<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[4,603,220,59,338],"tags":[932,1011,933,747,746,803,804,1009,1012,1013,1010,486,327,485,282],"class_list":["post-13161","post","type-post","status-publish","format-standard","hentry","category-china","category-consumer-non-durables","category-earnings","category-economy","category-retail","tag-bbby","tag-bed","tag-bed-bath-beyond","tag-chipotle-mexican-grill","tag-cmg","tag-coach","tag-coh","tag-holdrs-retail-etf","tag-nike","tag-nke","tag-rth","tag-sbux","tag-spdr-sp-retail-etf","tag-starbucks","tag-xrt"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Sifting Through the Rubble of Retail High-Flyers for Potential Trades - Long and Short - ONE-TWENTY TWO: Trading Financial Markets<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/drduru.com\/onetwentytwo\/2012\/08\/13\/sifting-through-rubble-of-retail-high-flyers\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Sifting Through the Rubble of Retail High-Flyers for Potential Trades - Long and Short - ONE-TWENTY TWO: Trading Financial Markets\" \/>\n<meta property=\"og:description\" content=\"(This is an excerpt from an article I originally published on Seeking Alpha on August 6, 2012. Click here to read the entire piece.) The HOLDRS Retail ETF (RTH) made new all-time highs in late July, and the SPDR S&#038;P Retail ETF (XRT) has remained in a trading range since failing a retest of its ... 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