In a special interview on Monday's "Mad Money" program, Jim Cramer took the pulse of retail with Matt Boss. Boss is the managing director of Department Stores & Specialty Softlines for JPMorgan Chase (JPM) .
Boss said this year's JPMorgan retail conference was the most bullish he's seen in years. Consumers have less debt and more savings than before and they're anxious to spend. Meanwhile, retailers are operating with less inventory and strong e-commerce operations.
Boss said we're only in the first wave of the retail recovery. He said the strength in athletic apparel and the home continues, but that will soon be met by a mobility and travel wave.
Boss's so-called "lag" trade, which includes laggards such as L Brands (LB) , American Eagle Outfitters (AEO) and Gap Inc. (GPS) , also remains strong.
Let's take a look at the charts of these three retailers.
In this daily bar chart of LB, below, we can see that prices have risen more than six-fold in the past 12 months. LB is trading above the rising 50-day moving average line and the rising 200-day line. The On-Balance-Volume (OBV) line has moved higher the past year to confirm the price gains. The trend-following Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since July.
In this daily Point and Figure chart of LB, below, we can see a potential upside price target in the $76 area.
In this daily bar chart of AEO, below, we see a strong picture. Prices are in a sustained uptrend, trading above the rising 50-day and 200-day moving average lines. Dips to the 50-day line have been buying opportunities. The OBV line is rising to tell us that buyers are more aggressive. The MACD oscillator is in a bullish alignment above the zero line.
In this daily Point and Figure chart of AEO, below, we can see that prices have met and exceeded their software-driven price target. Maybe some consolidation or sideways price action is needed now.
In this daily bar chart of GPS, below, we find another bullish chart. GPS has made a number of corrections over the past 12 months but remains above the rising 50-day line and the rising 200-day line. Trading volume has been relatively light but the OBV line is positive. The MACD oscillator has made new highs with the price action the past 12 months.
In this Point and Figure chart of GPS, below, we can see that prices have reached their $33 price target.
Bottom line strategy: I find the forward-looking fundamental thinking of Matt Boss interesting. The charts of these three retailers - LB, AEO and GPS - are positive but at or close to Point and Figure price targets. If weakness from the broad market spills over into the retail sector we could see a period of sideways price action for LB, AEO and GPS before renewed gains.
