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My indicators are giving neutral to slightly bullish readings this week, a mild upgrade from last week’s neutral readings, as the passage of the tax bill has brought some bullishness back into the market.
While the market in general is still extremely overbought, one sector that looks interesting right now is the retail sector, which got hit really hard earlier this year. Recently, though, it looks like many retail stocks are in the middle of a big short squeeze, which has sent the SPDR S&P Retail ETF (NYSEARCA:XRT) up about 20% since it bottomed in August.
In fact, a lot of these retailers still have a huge amount of short interest, which means that the squeeze may not be over. If retail keeps edging up, these shorts are going to have to cover eventually, and that should send the sector even higher, especially if the holiday-sales numbers come in better than expected.
For that reason, today I am recommending a bullish trade on Target (NYSE:TGT):
Buy to open the Target (TGT) Feb (2018) 70 Calls (TGT180216C00070000) at $1.05 or lower.
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