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Into Black Friday, I’d take a balanced barbell approach, says JP Morgan analyst Charles Grom. What I mean by that is own a Walmart (WMT) and a Dollar Tree (DLTR). But on the other side of that I’d also own Kohl’s (KSS) and Macy’s (M). The department stores have come out of favor and I think the smart trade is to go long those stocks into Black Friday.

This is Kohl's

In every single case I can spin every single piece of data negative. There are no pure positives. Target (TGT), Wal-Mart (WMT) and Kohl's (KSS) say back to school is good? A whole host of little ones say it is bad. Home Depot (HD) says things are getting better but Sears (SHLD) and Lowe's (LOW) can't say that.

Where else has the media been wrong? He cited a headline in the Wall Street Journal that said the consumer is holding back the recovery. "But that's not true," said Cramer, who noted that Target (TGT), along with Wal-Mart (WMT) and Kohl's (KSS) all said the back-to-school season was looking better than expected.

I like the J.C. Penney (JCP) dip and I notice the incredible action in Kohl's (KSS) and Target (TGT) and wish they were down. They are such tells for the turn, especially Kohl's, which is almost at its high. Reduced inventories more than make up for reduced sales.

That means you can make a lot more money on the oil-user side: retail like Kohls (KSS), J.C. Penney's (JCP) and Macy's (M); restaurants like Brinker (EAT) and Darden (DRI); apparel like Jones (JNY), VF Corp. (VFC) and Nike (NKE); as well as anything that goes into Best Buy (BBY).

"TGT has lagged the other names in the group: Kohl's (KSS) is up 28%, Macy's (M) is up 21%, JC Penney (JCP) has climbed 48% and Nordstrom (JWN) has rallied an astounding 56%." 'Retail Is a Microcosm of the Broad Market," 6-15-09

We can't lose the Macy's (M) and the Kohl's (KSS) either, and we learned that they are dependent on low, stable gasoline.

"Of course, that means it was all the expectations game. The other guys had taken down expectations to the point that their horrid numbers looked good, especially Nordstrom's (JWN), but Kohl's (KSS) and J.C. Penney (JCP) weren't so hot either. Abercrombie's (ANF) were terrible, the worst I have seen, but you could never lower them enough!" ("Retail = No Sale," 4-9-09)

corporate personalities

retail in the cellar

right now consumers are very nervous about the economy so I stay away from retail

Mad Money recommendation; Diversification.

"Kohl's (KSS), for one, has had a nice run, but now sports a chart rife with technical deterioration. Prices had been stuck in a range just below the stock's May 2002 record high of 78.83, before poking above that level April 20. Momentum indicators already had turned lower, and by last week were breaking down. It is still a bit early to declare that the bears have taken over, but Kohl's nearly doubled in the past 15 months, and peers such as Target (TGT) now expect much weaker sales. At 77 a share, the risks for Kohl's outweigh the potential rewards."