SHLD, WMT Have Same Problem

Retail won't work until we get more cuts. Usually, it would kick in soon, and I do believe we will look back at this period and wish we had done some buying. But what the retailers haven't done yet is retrench.

We all know the problems with Sears (SHLD - commentary - Cramer's Take). It hasn't spent enough and it is hostage to the housing crisis. But it hasn't closed the stores and circled the wagons. Home Depot (HD - commentary - Cramer's Take) and Lowe's (LOW - commentary - Cramer's Take) are still opening stores. Most of the retailers are expanding.

This is just a mistake. And until it is rectified, we will have a hard time getting out of this retail morass. We are simply overstored, whether it comes to the home improvement chains, the big department stores (Macy's (M - commentary - Cramer's Take)), the dollar stores (99 cents), the teen apparels (all of them) and the housewares (Williams-Sonoma (WSM - commentary - Cramer's Take)). There are too many Talbot's (TLB - commentary - Cramer's Take) and AnnTaylors (ANN - commentary - Cramer's Take). Way too many Office Depots (ODP - commentary - Cramer's Take), Staples (SPLS - commentary - Cramer's Take) and Office Maxes (OMX - commentary - Cramer's Take). Too many Wal-Marts (WMT - commentary - Cramer's Take) and Targets (TGT - commentary - Cramer's Take).

We have a glut. I can't believe that we aren't hearing about store closings. These companies are unrealistic. In a real retrenchment, they should be closing more stores than they are opening. That hasn't happened.

Until it does, and until we get the Fed's rate cuts and until we analyze these easy compares, the road remains rocky even as it shouldn't, given the history of the group and rate cuts. I know I am a big believer in patterns and have said this group can be accumulated. That's looking wrong and early right now -- unless we get these fixes, pronto.

Random musings: I have been puzzled about the reaction to Aecom (ACM - commentary - Cramer's Take) ever since the "reduced estimates" story was refuted on "Mad Money" by my interview with the CEO. I am now coming around to the idea that the company does too much domestic infrastructure linked to bond issues, which are going to have a harder time as insurance becomes tougher to get and belts get tightened. That's the real reason I think it hasn't rallied.

At the time of publication, Cramer was long Sears Holdings.

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