Eleven days ago, the retail ETF hit an all-time high. That's right, the VanEck Vectors Retail ETF (RTH) kissed $84, and even though its only down to $80, tell me that it doesn't feel like a worse bear market than the oil patch is enduring?
Of course, you can't feel it if you own the biggest player in the index, Amazon (AMZN) , at 20%. Nor can you tell it if you own numbers two and three in the index, Home Depot (HD) and Lowe's (LOW) . But the rest?
Now, in the silly little world that is ETFs, someone has created a monster here. The best trade in the world for the last 10 days has been to go long the three biggest in the index and then bang down everything else to set up a perfect play on what you see occurring in your screen.
That's right, with Amazon at 20% and Home Depot and Lowe's north of 5% -- the only ones higher than 5% besides CVS Health Corporation (CVS) -- you have an ideal long-short duo.
You do seriously have to wonder how Walmart (WMT) has a lower weighting than Amazon, Lowe's, Home Depot and CVS, don't you?
But don't get me started on that. What matters is that those top three have masked a decline of breathtaking proportions. I would say now that the vast majority of retail has entered some sort of rollover phase that I can't even recall, except during the darkest days of the great recession. It's as if people think that shopping is over, done, everywhere.
Now, I have been adamant that the Amazon move into food is the death knell for grocery margins. I am not backing away from that. I know that the mall stores are certainly challenged.
But now they are selling off the very stores that are the beneficiaries of the carnage -- Burlington (BURL) , The TJX Companies (TJX) -- which is a holding in the Action Alerts PLUS charity portfolio that I co-manage -- and Ross (ROST) . They are the ones who buy the merchandise from the companies with Amazon problems. They sell their merchandise under what Amazon can deliver!
Or how about Nordstrom (JWN) ? Just a few days ago, it was debating going private. I do not think that a press release about Amazon willing to accept the return of dresses should derail that deal. But now the stock is starting to roll over in a way that would say nothing's going to get done.
I think something will.
And now we are getting the breakdown of The Children's Place (PLCE) , which is the winner in the duopoly battle with Gymboree.
Right now, after the announcement of Amazon-Whole Foods (WFC) , I get that there is panic and fear everywhere. It can't be contained to just the grocery aisles.
But that said, I would keep in mind that there are winners and losers, not just winners. I articulated this position about Home Depot 10 days ago, when it was getting killed off of Amazon and it's had a great recovery.
I think we could be on the verge of a recovery on the other ones not in the crosshairs of the Seattle behemoth.
Unless you believe everyone is in the crosshairs. If that's the case, then go short the RTH and go long Amazon until the cows come home.