ROMULUS REPORT: NOVEMBER 15, 2021

If you are in the mood for a little retail therapy, you’ve come to the right place. With bells ringing and shopping malls singing, it’s the season to shop. Demand is pent up and supply is stuck up (in the ports, that is!). This combination leaves us with the potential for a record setting year. There will be diamonds and a few lumps of coal, but the market should show us the way. Let’s go shopping!

Thank goodness I have stock charts to help me figure this out. I am the world’s worst shopper. If it’s not a surf shop, I don’t like going to stores of any kind. Big boxsellerslikeWalmartandTargetfreakmeout. ItwitchanytimeIaminamall, and I experience low level anxiety when it becomes obvious that I need to buy clothes. Fortunately for me, I met Ralph Acampora 24 years ago and I’ve been neck deep in these charts ever since. I believe in the predictive power of markets, and this power is exhibited every day in the buying and selling of millions of people, which shows up in the charts. This method is not 100% accurate, but it is better than anything else I know of.

A few months after the start of the pandemic, it became clear that buying things online was the only way to acquire things. A lot of retailers went bankrupt, including some big names like Lord and Taylor. Amazon was the major winner in this disruptive period, with their stock more than doubling from the covid crash lows. The biggest winner, however, was a mainstay of holiday shopping for decades that almost didn’t survive the new world that Amazon built.

Macy’s was founded in 1858, making it one of the oldest companies in America. It was bought out by Federated in 1994, which combined it with another old stalwart, Bloomingdale’s. The firm changed its name to Macy’s, trading under the ticker M. There was a lot of talk during the spring of 2020 that Macy’s was going out of business. The stock dropped to five dollars and essentially near those lows until a year ago. It was said that Macy’s would never figure out a way to compete with the online giants, let alone the discounters as they transformed their business models to a hybrid brick and mortar, internet force.

Bankruptcy discussions are over, and Macy’s stock is on a tear. At $30 a share, M hasbeenaleaderintheretailsectorforthepast12months. AsIamnota shopping person, I don’t know what they are doing differently, but it must be something. As you can see on the weekly chart, the stock is hitting an area of serious resistance right now, which could stall the recent advance. It is also not unusual for a stock coming out of a rounding bottom like this to form a handle or some other kind of consolidation pattern at this point. M is worth keeping an eye on, though, especially for the next two months.


Amazon will attract the most attention from traders and investors this shopping season and that attention is fully justified. This company has completely re- drawn the retail experience, practically invented large scale cloud hosting and is now assaulting Netflix and Disney. With the highs of last week, a new uptrend can be officially declared. Like Macy’s, Amazon is also hitting an area of potential resistance, which could mean a temporary break in the action. With the volume picture improving from the end of August, though, AMZN should mend those hearts it broke in late July when it smashed back into that year-long consolidation pattern.



Target and Costco have enjoyed strong stock runs this year, but Walmart has been stuck for the last 15 months. This company has a large customer base, but a reputation for weak customer service. Their online division has not kept pace
with Amazon for years, and Sam’s Club was a laggard to Costco from the beginning. Despite those issues, the stock seems to be ready an upside breakout. The volume picture has improved since March, and there is a slight uptrend in place dating back to March 1st. On a risk/adjusted basis, WMT might be the best stock mentioned so far. It is a straightforward trade to set up. If it can trade a little above 152 on a volume expansion, it should see 168 by February.


Noteverystockontheretailblockisabargainrightnow. Aheavilyshortedstock, Ollie’s Bargain Outlet (OLLI), looks like an expensive stock these days. And there is a company called Poshmark that went public earlier this year. I would stay away from it. It may be Posh, but buying a stock at 20 that drops to 10 in six months can leave a mark!

There are several stocks in the retail group coming out with earnings this week. Earnings related volatility is higher these days than it has been in a long time. Be a little careful.

There is an easy way to get investment exposure to the retail group without walking up and down endless stock market aisles. XRT, the retail ETF, just broke out of an eight-month consolidation. It is a little extended now, but then again so is just about every stock on the market. A simple way around this is to buy some, then add more if it drops.



The retail story can’t be told properly without looking at the ground under the stores. Commerical real estate is having a good year, with the top mall operator, Simon Property Group, up almost 100% in 2021. Amazon is now leasing space in old malls in order to get closer to customers. Traders also seem happy with SPG, especially after the last earnings report. The stock gapped up on huge volume, and there seems to a flag forming right now. This stock has 190 written on it, most likely by the end of January. SPG deserves close attention right now.



Now, onto our short squeeze hot list!

Many of the stocks on this list, which I first presented to the group in August, have been on fire lately. This is a direct result of what I’ve been saying for the past month, get long and buy the dips. Stocks like this only thrive in strongly bullish weather. Unless you have a deep understanding of the actual company, these are not stocks to be held for intermediate or longer periods of time. One catalyst for the recent revival was the climate summit in Scotland, which placed a lot of focus on the electric vehicle group, which has a lot of these highly shorted stocks. Stocks like NKLA and BLNK shot up 50% in the last month. The stocks also have a tendency to drop like rocks after the glow wears off. TSLA is down over 20% in the last week alone.

My answer to this extreme risk/reward playground is to buy IWM, the small cap ETF. I know, however, that plenty of you have the time and ability to watch and trade these stocks pretty quick, and I want to continue to help. First, the weather is still good and should stay that way for a few months. Second, even though a lot of these stocks are up and should not be chased, there are others that are waiting their turn. I just bought IRobot, the robot vacuum maker. This is a highly shorted stock and a company that can benefit from strong holiday shopping. One of the better plays in the short squeeze list is OTRK. The 14 period RSI has done wonders for us, leading us into and out of a lot of tremendous trades. Let’s see if it can work its magic on OTRK.



Here is our running list of some of the most heavily shorted stocks in the market now, along with a few additions (IRBT is a new one).

BGFV WEBR SDC WKHS AGC BLNK BEEM GOGO FUV LMND KNBE OTRK GOEV NKLA APPH TDUP SNOA CRSR ICPT FSR PETS IVC IRBT BGS GEO CNK SABR TUP BIG BLMN LPSN

Remember, exercise caution when shopping from this list. I will do my best to keep bringing the weather reports, but sometimes these stocks can get smashed during perfect conditions. Look at SDC. The stock dropped 20% after earnings last week.

Happy shopping!
Stock and Crypto Market Values by Maxim Hopman is licensed under unsplash.com

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