Ride the Retail Train

To follow-up on indigo's post last week I'd like to think about a few ideas for the holiday rally. First of all we are in a very strong market heading into the santa claus rally time frame. It is widely expceted that consumers will be eager to spend spend spend this christmas in celebration of lower gas prices (lower than 6 months ago) and higher wages (yoy). How will they spend their money?In the the retail apparel sector I like JWN and they post earnings monday after the close. They will undoubtably beat expectations and raise guidence as they always do. JWN is the best retailer and I speak from experience, if you have ever been in one you know what I'm talking about. That being said, the premium on the calls is too high to try and buy them ahead of earnings and why take the risk? I would recomend buying JWN (calls) at the open tuesday assuming the numbers are good enough to get JWN over $49 as a close above this price would make way for the next leg by completing the bull flag. The chart (above) couldn't be more bullish, pull up a weekly if you like the daily.
For a more conservative play on a booming season for retail buy dec or jan RTH 100 calls. RTH is the retail index etf that includes names like best buy (my fav), home depot and also clothing retailers. While the etf has not been able to hold above 100 on recent moves into this new territory, it looks poised to call par ($100) support soon.

The video game industry is in the midst of a boom phase in that cylce with three new consoles on the market this christmas. Unfortunately, Sony (SNE) had manufacturing problems, Microsoft (MSFT) sucks and Nintendo is only traded on the japanese exchanges. As I mentioned a few months back I don't like the brick and morter game shops because the new consoles enable players to download old games online rather than buy the used ones stuck in GMR's inventory. But what about ebay? For one thing they will benefit from the fact that the new nintendo system and the playstation both play games from older systems (used games). Then theres the half of all those people waiting in lines to get the sold out consoles that put theirs up for sale online for double, triple or in some cases much more on their money. It might be interesting to find out what the turn over rate is on consoles as ebayers try to flip consoles online at the peak demand closer to christmas. This is just one reason I like ebay, indigo pointed out a few of the others last week so see his post. The stock broke out of that ascending triangle and has plenty of room to run. I will be taking at least some profits on my calls around 37.50, the declining trendline from previous highs.
I will try to update the post during the week with links. Happy trading! -pyth