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Retail Support Shows the Dead Can Rise Again: Market Recon

"I don't believe in flagship retail, because the definition of flagship retail is that it's a marketing expense, and it's going to lose money.

Equity markets traded sideways yesterday. There was some weakness seen across the healthcare space, as well as the financials. One, thanks to the immediate uncertainty regarding policy, the other still due to soft guidance seen on Friday when the big three banks reported earnings that forced some profit taking. The bond proxies showed some strength, as yields were pressured. There was one industry withing the Discretionary space that showed some leadership to the upside yesterday, and ironically, this is an area that most have by this time given up for dead.

Make that the Undead. Rise. Almost all of retail found some support in yesterday's quiet trade, but what we refer to as the multi-line retailers really roared. The catalyst? Cowen (using data provided through National Traffic Devices) released some research that showed retail traffic across the United States almost 10% lower year over year for the week ended this past Saturday. Of course, almost anyone who has shopped for anything recently has noticed the solitude of the task. The positive? No crowds. The negative? No help in the aisle, nor at the register.

The difference maker, at least for one day, was apparel. Dead right? Hmmm, not so fast, tough guy. While traffic at stores that sell clothing was still indeed lower on a yearly basis, that very same data showed that apparel sellers saw traffic declines of only little more than 5%. In comparison, traffic at the very low end -- electronics sellers -- was exceedingly light (-26%). Permanent trend? How can one say. I will say this. My wife dragged me around on Saturday, as she shopped for some new clothes. She also often helps me with my own unofficial research in this area. She is the one that got me out of Lululemon ( LULU) ahead of that earnings debacle back in March.

It did seem to me that the stores outside the mall -- at a free standing Kohl's ( KSS) , and a free standing Old Navy ( GPS) , specifically -- were benefiting mildly from discounting. Both had full parking lots, and both had lines at the register requiring significant wait times. BTW, I am long KSS.

Macy's ( M) led the way on Monday, but Guess ( GES) , KSS, Abercrombie & Fitch ( ANF) , Michael Kors ( KORS) , JC Penney ( JCP) , and Ralph Lauren ( RL) all enjoyed gains in their stock prices that approached 1.5% or more for the session. On top of this warm and fuzzy group hug, there has also been significant levels...