Shorts who short sold Xrt/Rth and other retailers or those who bought the relevant puts options have been losing money since one year ago. They do these becasue they have been reasoning that the economy was not good, foreclosure has been increasing, and unemployment rate has been so high so that people have been in short of cash.
They are wrong.
1. As people choose to walk away from their debt/mortgage obligatiions, they truely feel liberated. No matter they have jobs or they have receiving unemplymnet benefits, they have relatively more money on daily consumption -- eating, shopping, etc.
2. Ecomonmy being bad is true, but, remeber, big ones are getting bigger, and survivors are stronger. While street grocery stores are closing, people are visiting walmart, JC penny, TJ Maxx, Costco more ofen.
There are more reasons why retailer stocks have been performing so well.
When the economy gets fully recovered and when the housing market is bottomed out, when more street coner stores are opening their doors, the retail stocks may be in jeopardy in terms of their performance.