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Today, we’re opening a new bearish trade on Nordstrom (JWN). We have been watching some of the early reports in specialty retail and “personal goods” with a lot of interest. The group has been struggling this quarter and has largely blamed its performance on a shift away from department stores. For example, review the Coach (COH) and Estee Lauder (EL) reports over the last few days for typical statements along those lines. We think this is a clear, negative sign for department stores.

Puts on JWN give us downside exposure during a quarter when we expect investors to be hyper-focused on retail data — especially Nordstrom, Macy’s (M) and J.C. Penney (JCP). JWN has just completed a bearish divergence that should send the stock back down through its August gap.

 Buy to open the JWN December 50 Puts (JWN161216P00050000).

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