Like many of you, I've got family and other strangers shuffling in and out of my house this week, so forgive my tone in advance. Trading from home has it's disadvantages, and the holiday season is a big one. With so many visitors loitering in my home this week, I am having difficulty keeping a low profile. As these people roam, they manage to find a way into my office, and the first thing that they try to spark up conversation about is the wall of monitors here in my office. Most of them have cracked a joke about me "working for NASA" or being a hardcore gamer. In turn I crack a joke about them being dropped at birth, or being born with both sets of reproductive organs. You know, just to keep things entertaining.

The topic of blogging has come up with them on occasion, and I try to explain financial blogging to my relatives in the same way I would explain the H1N1. At first, it was new and interesting and something you wanted to learn as much as possible about. Now, it's something you want to avoid at all costs because everyone has it, which makes it much less important.

Because there is a good chance that trading this week could be somewhat vanilla, I have outlined a few topics I want to blog about this week in advance. As always, I want to talk about actionable ideas, but in case stocks don't move this week, I want to get into a few strategy type themes that I've done so much of in the past.

Tonight I am going to celebrate the upcoming "Black Friday" and holiday shopping season with a look at retailers. Whether or not you think people will spend money this year is besides the point. I just want to look at some cool charts.

The more time I spend looking at retail stocks, the more I struggle to arrive at a conclusion or a "theme." That might sound troubling but it is actually a good thing in this instance. You can look at the ETF RTH and conclude that prices are strong, just off their highs, and in a strong trend. Then again, the RTH is predominantly measured by WMT, HD, AMZN, and TGT, which combined account for roughly 50% of the weight of this fund. I am a bigger fan of the XRT, which is a more diverse look at the retailers. There are 65 holdings in this ETF, and no individual stock accounts for more than 2%. Included in this ETF are more relevant retailers such as M, KSS, TJX, ANF, JAS, SHLD, JWN, PSS, DBRN, PLCE, etc.

Looking at the chart, prices have been coiled up lately. On the day we saw an insignificant advance with some good volume behind it.

However, I am not so sure this ETF really quantifies what is going on within the retail sector right now. I have noticed a lot of separation between retailers, especially in many correlated companies. When this happens, this is usually a great time to step up and be a stock picker. A group of highly correlated stocks showing separation, is a directional traders dream, and makes for a great sector to focus on from a directional perspective and pick strong stocks. Conversely, "The Gift of Picking Stocks" is a topic on my short list for upcoming posts.

Anyway, back to retailers. Take the department storesfor example. There is a decent split in performance. Stocks like M and KSS in my eyes look to be a breath away from confirming head & shoulder patterns (read: reversal), and JCP which has tumbled more than 20% from its highs. On the other hand, you've got DDS ripping to new highs on an upgrade, and SHLD and TJX trading within a few percentage points of yearly highs.

Next, you've got the apparel stores, which are a little easier to game. In charting a handful of the top 20, take a look at the difference in performance. 

Bullish: GPS, ANN (confirmed bottom), JWN, URBN, ANF, JNY

Bearish: AEO, ARO, HOTT, TLB, FINL, PSUN 

Notice the dramatic change in performance amongst these stocks?

As mentioned earlier, I think this group is ripe for stock picking. There is enough individual movement in this space, that it makes trend following a little easier on individual issues. Most of these stocks have been moving individually, regardless what the group has been doing.

My "Fave 5" in retail would be JWN, SHLD, ANF, GCO, and JNY.

Like the technicals? Me too.

Get out and pick some stocks!

OA