Editor's Note: Alan Farley's column runs exclusively on RealMoney.com; this is a special free look at his column. For a free trial subscription to RealMoney.com, click here. This article was published June 11 on RealMoney.

'Tis the season to be jolly! That frosty nip in the air, the spiked eggnog, the shopping rush -- they all tell us the holidays are right around the corner.

Hey, wait a minute. My calendar says we're still six months away from old St. Nick. But guess what? Now is the time to start picking winners and losers for this year's festivities.

Our markets are a future discounting mechanism. Retail stocks project holiday revenue months before cash registers ring up their first yuletide sales. So let's make our wish list now and go find Santa before a long line forms. If our portfolios haven't been too naughty, our stockings could be stuffed with holiday profits.


Source: TC2000

Dillard's

(DDS) - Get Report

rallied to a two-year high, and its price doubled earlier this year. Last month the stock hit $30 and began to pullback with the rest of the sector. Dillard's should be a popular play as we approach the holiday season. Price is nearing support, and the pullback may be over. The stock has multiyear resistance under $40, so this could be a good level to take profits.


Source: TC2000

Sears

(S) - Get Report

rallied to a four-year high after surprising analysts with strong revenue. Sears attracts holiday shoppers with its broad selection and senior status in the sector. The stock is now in a corrective phase and needs to pull back to lower levels before it represents a good buying opportunity. Right now, it looks like the lower $50s would make a good entry point for a ride on Santa's sleigh later this year.


Source: TC2000

Cost Plus World Market

(CPWM)

has something for everyone. This makes it an excellent choice for your holiday portfolio. The price chart looks bullish at this juncture. The stock is near a two-year high after breaking above a long-term downtrend earlier this spring. The stock has been basing above $30 and looks ready to challenge last month's high of $35.


Source: TC2000

Specialty retailers have been strong performers for many months. Though the group weakened a bit in recent weeks, several components are bucking the trend.

Pier One Imports

(PIR) - Get Report

broke out to an all-time high earlier this year and has been dealing with the consequences ever since. It's gone sideways over the last four months while accumulation catches up with its lofty status. Pier One's volume readings just spiked, suggesting this congestive phase is almost over. If so, the stock could rally from these levels and be at much higher ground by the time the autumn leaves fall.


Source: TC2000

Williams-Sonoma

(WSM) - Get Report

is another specialty retailer showing few signs of weakness in the current market. It's been rallying through all-time highs for most of this year. The chart shows a brief pullback that may be over, allowing the retail juggernaut to jump to higher prices. Where will this powerful rally end? It's hard to tell, but keep in mind that the stock has no overhead resistance.


Source: TC2000

It's a tough economy out there, and not everyone can shop at trendy stores.

Big Lots

(BLI)

is the shopkeeper for the rest of us. It's a discount merchant and markdown specialist that's a favorite for cost-conscious consumers. It's also one of the

Big Board's

hottest stocks. Big Lots has rallied over 130% since last September in a vertical move that still has legs. And if the boom times don't return soon, this company may teach more expensive retail outfits an important lesson.

Alan Farley is a professional trader and author of

The Master Swing Trader

. Farley also runs a Web site called

HardRightEdge.com, an online resource for trading education, technical analysis and short-term investment strategies. At the time of publication, Farley did not have any positions in any of the stocks mentioned in this article, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Farley appreciates your feedback and invites you to send it to

Alan.Farley@TheStreet.com.

Also,

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