Amid Sharp Gains, Pro Traders Reveal Strategies for Retail
On Tuesday the Fast Money pro traders were taking another look at retailers, after retail sales rose more than forecast last month.
In fact, retail sales recorded their largest gain in five months in February – a data point that’s particularly noteworthy because it happened amid rising gasoline prices.
The strength drove both the retail sector higher as well as the entire the S&P 500 which hit multi-year highs.
“A strong retail sector gives the Street more confidence,” explains pro trader Stephen Weiss.
“We’re long,” adds trader Simon Baker.
But considering the sharp gains, should you play the space broadly?
Baker doesn’t think so. Instead he’s only bullish on retailers that have pricing power – names such as Tiffany , which is crossing above its 200-day moving average, a bullish technical sign. "Diamonds don't go on sale," he says.
Baker also likes Michael Kors, GNC and Lululemon . “Anything with a cult following,” he says.
Weiss agrees but adds retailers that are effectively managing operations are also worth a look. He likes Macy’s for just this reason. “But I’d be short Sears and Penney based on valuation,” he adds.
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Trader disclosure: On March 13, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Weiss is short JCP; Weiss is long VZ; Weiss is long QCOM; Weiss is long JPM; Weiss is long EUO; Weiss is long TBF; Weiss is long HAIN; Weiss is long SNDK; Weiss is long BRCM; Weiss is long NFLX (PUTS); Weiss is long CSC; Weiss is long BKU; Weiss is short MT; Weiss is short ANR; Weiss is short FCX; Weiss is short FXA; Najarian is long AAPL call spreads; Najarian is long GS call spreads; Najarian is long JOYG call spreads; Najarian is long RIG call spreads; Najarian is long LULU call spreads; Najarian is long RL call spreads; Najarian is long MSFT call spreads; Najarian is long UBS call spreads; Najarian is long WDC call spreads; Brown is long AAPL; Brown is long QQQ; Brown is long JPM; Brown is long LULU;
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