Trader Talk

Next Week's Stars—The Retailers

Next week, more from retailers. October Retail sales on Monday, along with more retail earnings from companies like Saks and Target .

Key retail takeaway: many key retail stocks continue to trade near 52-week highs because gross margins are improving due to lower inventories (so there are less promotions), and costs are much lower.

Another factor helping some companies: private label brands. Both Kohl's and JC Penney reported strong private label sales, which carry a higher gross margin.

Bonuses are up, and that's a good thing. Both JC Penney and Nordstrom reported higher Selling, General & Administrative (SG&A) expenses—this is the middle part of the income statement, which is the cost of sales employees and other expenses.

It is going up because managment is rewarding employees for beating expectations. This goes all the way down to the level of store managers and associates. It is a good sign.