Last summer I wrote a pretty controversial post about the fact that everyone just assumed retailers were all going bankrupt and buying their stocks was foolish. My argument at the time was the exact opposite: I felt that to not be buying retail stocks was irresponsible. Here is that post titled, “Is This Really The End Of Retail As We Know It?”. There many stocks at the time that presented us with well defined risk with rewards exponentially greater than any risk we were taking. That worked out very well for us.
At this point, we’re still hearing this short retail narrative from stock market bears digging for anything they can think of to not admit they were very wrong. You see, that’s the difference between people who make money and those who don’t: the ability to change your mind. Remember, we’re not here to be right, we’re here to make money. Check your ego at the door or this market is going to rip your face off, as it has done to many retail bears.
One of my big arguments at the time was that this “Head & Shoulders Top” that everyone was pointing to wasn’t that at all. I was in the camp at the time, and still am, that this was just a consolidation within an uptrend on its way to resolving higher. Here is what this looked like last Summer, and what it’s done since then:
Click on charts to Zoom in
The point of this post is not to talk about failed head & shoulders patterns. You can go here for that discussion. What we’re doing here today is focusing on the strength in retail and what we should do about it now!
Here is an example of Best Buy breaking out above the 2006 highs, well on it’s way to our target near 90:
This is still one we want to be buying on pullbacks.
Here is a list of the rest of the stocks we want to buy: