Too Big to Ignore

 | Sep 16, 2011 | 10:40 AM EDT
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This retail move is breathtaking. Just breathtaking.

Ross Stores (ROST) is up a couple. Costco (COST) is at a 52-week-high. Target (TGT) is up a quick buck. Home Depot (HD) is following up on gains. Kohl's (KSS), Macy's (M) and J.C. Penney (JCP) are on fire.

It is entirely possible that there is some sort of short going on with the Retail HOLDRs (RTH) and expiration that is part of the underlying bid.

But when you consider that oil's been stubborn, that employment has been punk, and that August was a weak month, these moves are just amazing.

What does it mean? How is it possible? I think the group was a natural short and that the hedge fund managers, who read the macro tea leaves, could not resist the bet.

At the same time, the group has the best balance sheets I have ever seen it have. It is one thing to see the dollar stores on fire, which they are again, but it is another thing to see the high end doing well. That's been an endless theme with Ralph Lauren (POLO), Nordstrom (JWN), Tiffany (TIF) and Coach (COH) leading the way.

But this move is too big to ignore.

Without some sort of actual input that tells me things are better, I would scale out of the middle-income retailers and stick with the high and low end. I just don't see a catalyst to keep this move going.

But, wow, has it been a terrific run.

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