Below is my weekly video for members of Macke's Retail Roundup.
It's been a helluva week. Even with Friday's bounce, XLY is still by far the worst-performing sector this year.
Crashes are easy. I’ll tell you what to do if stocks fall 20% in one day: Buy something.
Bear markets are a different vibe. If a crash is a blitzkrieg, bear markets are a seige. Every day like the last. Long, negative, intermittent spells of misery. Since December 17th the Consumer Discretionary SPDR is down 18%. No day much stands out as particularly miserable. So far, 2025 has been about two weeks of hope, followed by stocks falling 4 out of 5 days, usually about 1%.
The XLY has now given back all of its gains since last October and is breaking down much worse than that below the surface. First they came for the darlings like Elf and Abercrombie and no one said anything because those were momentum plays.
But the market isn’t just coming for losers on the day they disappoint. Stocks like ANF sell off seemingly every day. It’s been folded in half since January. The stock is “cheap” and untouchable. The chart is a bottomless pit of despair.
The losers haven’t been saved by low expectations, either. No one expected anything from Target and that’s pretty much what we got. Nothing. In a better tape optimists would come in and buy the dip after a while. Not in this tape. If Target couldn’t handle the imaginary dock strikes of last fall how are they doing to deal with Tariffs?
Target was untouchable going into earnings, coming out of earnings and now, a week later, is still dead money. More on that in a bit.
How about Target’s ne’er do well cousin from Wisconsin, Kohl? Kohl’s took down margins, earnings, comps and the dividend for the entire year all based on weaker sales trends starting in February!
I told you Kohl’s would miss. I told you the stock was untouchable. What I didn’t expect was how shocked Wall St would be by the news. Kohl's down 3 days in a row, a total of 26%, and still untouchable.
Thursday we had AEO and Build-a-Bear which I’m long. Both report decent quarters. BBW was actually better than decent. The company beat for the 4th quarter, guided revenue higher for Q1, and allowed for a measured, reasonably variable impact from Tariffs and the like.
Like the better-than-expected quarters from On and Gap before it, BBW shares couldn’t find many buyers of the good news. Shares drifted lower all day after going as much as 18% higher pre-market.
If “winning” looks like ending up 1% for the day on a stock that’s been selling off for a month the long side is out. There’s no place to hide in a siege. Not for long, anyway. Walmart reported three weeks ago and Wall St is still finding new reasons to sell the news. And if they couldn’t make up reasons all bears had to do was wait for headlines like “China and Walmart to meet over trade sanctions”.
I don’t know what that means , but it sounds like it will hit margins. Wall St agrees. Former darlings Walmart and Cost hammered this week, along with Target.
Sellers are coming for the good and the bad alike. This isn’t a tape for heroic bullish stances.
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