The American consumer has been declared dead every year since the dawn of time. Again this year the lists of the most heavily shorted stocks is dominated by retailers and other consumer names. While some of these shorts have proven prescient others, like Abercrombie & Fitch (ANF) have been bear killers.
According to Ryan Detrick of Schaeffer's Investment Research the retailers have more room to run. Detrick pays special attention to price action compared to bearish sentiment. When he sees a stock or group of stocks moving higher even as shorts add to their positions Detrick wants to get in on the long side.
In the attached segment Detrick lays out the bullish case for 4 retail-related plays, explaining why he thinks they have more room to run.
SPDR S&P Retail (XRT)
Abercrombie & Fitch (ANF)
Home Depot (HD)