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You Want to Short Here? Good Luck
Posted at 8:44 a.m. EDT, April 6, 2009

What can be shorted here? Heaven knows things have run, but it's a tough game to short if only because of where we are in the cycle: Pretty much anything can be justified for owning here, whether it be the beaten-down drugs with their powerful yields, or the steels given their possibilities ahead -- even if somewhat muted by fact -- that stimulus will kick in.

One could argue that we could see a repeal of the retail move given how far and how fast it has occurred. Consider, for example, Coach ( COH). Does anyone think that Coach is actually doing well? It's more than 50% off its low. But it has been cut in half from the high and it is a great company. The idea that it can recover and year over year do well is hardly fanciful. Nordstrom ( JWN) has tripled off the bottom and is up 46% for the year. But it is down 40% year over year, and the possibility of a Nieman Marcus bankruptcy could be as powerful for it as Circuit City has been for Best Buy ( BBY). And what about Best Buy, which has rallied far more than any other retailer? There, too, you have to be careful. New TVs because of digital changes and HD, and Circuit City's demise could really get BBY going despite its run.

Sears ( SHLD) seems to have moved tremendously vs. how it might be doing. But it was forced down by naked shorts, and I think that despite all you hear about how poorly run it is, the company did better than expected last quarter ... and it's not as if the other companies are doing spectacularly.

I would not short Home Depot ( HD) or Lowe's ( LOW), as they are classic refi plays, and if card check is off the table, Wal-Mart ( WMT) is an out-and-out buy.

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