Today is one of the biggest on-line shopping day of the year.
Everyone goes to their offices today and takes advantage of bosses who are on extended weekends, using the T1 access at work to pick up all those little items they missed in the weekend buying frenzy. You would think this weekend was a big disappointment according to the WSJ and the spin I’m hearing from Clueless Narrators Bashing Consumers who are fixating on the item that per person spending is down 3.5%.
As I said in member chat, this is a ridiculous statistic with overall spending up 8% as it’s like the bears are saying: "The bad news is we’re being attacked by an army that’s 8% larger than we thought but the good news is they’re moving 3.5% slower." All that means is that, if the bears start running now, they just might get away and that’s what the retail bears are trying to do with this spin campaign. The bears are also making much of the discounting but it’s the same issue. Perhaps people are spending 3.5% less this weekend because their cars are full as 96.5% of their money is buying more this year!
I’m far from declaring a retail victory but the stats we’re seeing so far are very much in-line with the heads up we got from the PSW Retail Survey which indicates a major victory for Apple this season. Game stores (GME) and anyone who makes stuff for the Wii should also do well and even (CC) may mount a bit of a comeback as consumer electronics are clearly hot, hot, hot. The high-end, by contrast was not, not, not and it will be interesting to see if the luxury buyers are paring back or if they are just a little slow out of the gate. Based on the 1,000-point drop in the Dow leading into this weekend, it’s really no surprise that the Nordstrom’s crowd may have taken the weekend off to check their lists twice before going to town this year.
A luxury shopper is more prone to reallocate their spending, as most items they are buying are very discretionary, than a low-end buyer who NEEDS a talking Dora or a web-kin and MUST buy one by Christmas so a sale will bring them running to the stores. Luxury retailers may have been lulled into a false sense of security by summer buying patterns and were not aggressive enough out of the box this weekend. Barron’s has been bashing (COH) but that is one of the high-end standouts we’ve been seeing so let’s make them our high-end retail play with the May $37.50s at $3.70, we can sell $40 calls against them when they get to about $1 but there is no hurry as we have 2 earnings reports ahead of us.
Also, speaking of Apple, we’re going to grab a round of (AAPL) $180s, currently $5.35 today to offset a run out of our Applefly range. Generally we should be looking for about 1/3 of whatever we have committed on our butterfly plays. We can also take out existing callers rather than buying new calls and add back the lower leg on a downturn but I won’t be around today so buying more calls is easier for me as the money we make if Apple goes back to $165 outweighs my potential loss if I don’t get an Apple breakout over $175 on the new calls. Of course we’ll roll the AppleFly if it keeps going up, but this is a good initial move.