Seeking Alpha
Profile| Send Message| ()  
The broad decline in the retailers today could be the start of a bigger sell-off that's coming.

I'm specifically focusing on some of the more extended department stores such as Kohl's (KSS), Federated (FD) and JC Penney (JCP), as well as select teen retailers like American Eagle (AEOS).

Kohl's has been on fire this year, nearing its all-time high of $77.75 set back in 2002. In fact, the stock is up over 50% on the year, and has gone nearly straight up since breaking through its trading range this summer.

Still, the stock's been struggling as of late, falling from its high of $73.97 set a few weeks ago. In November, the company reported November comps that were at the high end of the company's guidance, but below many analyst estimates. In a press release, Larry Montgomery, Chairman and CEO, said he was pleased with the performance over the Thanksgiving weekend, but his words of comfort haven't stopped the stock's slide.

Even a recent upgrade from Matrix Research has failed to prop up the stock as it continues to show weakness.

With the stock now below its 50-day moving average, I'm watching to see if it can hold its most recent closing low of $69.09. If that level fails to hold, watch for continued weakness through the holiday season.

KSS 1-yr chart
KSS

Disclosure: Author own a small number of KSS puts and will be looking to add others in the sector.

Source: Expecting Continued Weakness From Kohl's And Other Department Stores