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XRT, Your Retail Proxy


Congestion patterns will break - but sell options premium until they do.


e) {}" href=""> Went to the Mall Monday morning. How empty was it? Well, hard to conjure up a metaphor, but pretty un-packed on a relatively chilly holiday.

Now, I could say maybe the economy is so good that everyone in town has gone away. But I'd also say that we're in a New Jersey burb where most everybody seems to work on Wall Street. And now seems to not work on Wall Street.

But hey, the mall traffic should pick up soon. Paul Stanley is showing up on the 28th, apparently to drink a glass of wine and show off his paintings. Was he really the lead singer of Kiss? Seriously, I thought it was Gene Simmons.

And I thought wrong, it was indeed Paul Stanley. Or Stanley Harvey Eisen, as his wiki page calls him.

But whatever, not here to talk about the past. Except maybe retail.

I like XRT better than Retail HOLDRs (RTH) as a proxy for the sector, as RTH is a tad Wal-Mart (WMT) heavy (Wal-Mart comprises nearly 1/4 of it.)

And talk about your flatlines.

Options volatility has caved from 97 a little before Black Friday to about 50 now. But like basic index volatility, even a 50 looks too high. 10-day HV dipped under here around Christmas, and hasn't perked it's head north since.

And you can see the chart - it's just incredibly range-bound.

Look, it's understood all these congestion patterns will break at some juncture. The point is it costs you money each day pre-anticipating when that might happen. Best to either sit and wait - or sell options premium until it does.

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