ProShares purchased a full-page advertisement in this week’s edition of Barron’s for a new product launch, their “Decline of the Retail Store ETF” (EMTY).
The “short retail” theme is nothing new, analysts have pitched this concept for several years. Within the last 24 months, some notable value investors have considered some select high-quality retail names and these names have continued their decline and general poor performance. Examples include Nordstrom (JWN) and The Gap (GPS).
Historically, some investors have utilized non-financial magazine covers as a contrarian indicator. When a magazine like Time or The Economist shows an emotionally charged cover image of something related to a financial market (e.g. “The Mighty Dollar), it typically occurs near the high or low for that market. For a particular business sector, like retail, investors should keep their eyes peeled for slightly more subtle indicators, like the launch of a new ETF.
I’m sure retail didn’t bottom on Friday, but the low is probably close.