Retail Looks to Slow Down
Posted On Wednesday, January 6, 2010 at at 2:51 PM by Finance FanaticNow that the super bowl of shopping has ended, many retail stores are biting their nails, hoping that they can survive the coming months. I had the opportunity to speak to several different retailers over the holiday and most had the same story. It was a very scary year for them, and many are still holding on by a thread, hoping that indeed we've seen the worst days, and that it will begin to get much better soon. Unfortunately, for some of them, that will just result in wishful thinking.
Shorting the retailers at this point is very tempting to me. Most have made recent jumps, due to favorable holiday spending. However, I believe there will be a rather strong whiplash, as now consumers do not have much reason to shop. In fact, most retailers have to wait until late spring to start seeing better numbers, as they switch out there winter inventory for summer products. Even still, summer sales usually bows in comparison to back to school and holiday times. The recent run retailers have seen, should pull back for the next few months. Bed, Bath and Beyond jumped today on favorable results, which is one on top of my list to short.
The market is still seeing incredibly low volume, which is typical for the first week of the year. Investors are anxious to see the tone that 2010 sets. Most likely, we are going to see a lot of legislative changes this year, as President Obama has made it very clear that he plans to change a lot of things this year. Such changes are bound to have a performing effect on certain industries. Of course, the big one being health care. Health care companies are very nervous to see what this year brings.
For the time being, I am continuing to wait for more volume in the market. Under 200M volume is a very low number to be playing out there. Banks clearly have separated themselves from Uncle Sam and have their own agenda for 2010. Unfortunately, I do not believe "making loans" is on that list. Happy Trading.