The Christmas Retail Rally Could Be Toast

Shown below is a retail proxy, the Retail HLDRs Exchange Traded Fund (RTH). It’s outperformed the S&P500 on a three month basis. Yet Best Buy’s (BBY) warning today, that revenue will be driven by lower-ticket items in the fourth quarter, could mean that the pre-Christmas retail rally shown below is toast.

Note how Best Buy dropped a nasty 7% on just these decent earnings. A lot of holiday cheer is already priced-in.
[image url="http://static.businessinsider.com/image/4b27ab3a000000000064bc5f/image.jpg" link="lightbox" caption="" source="" alt="bby" align="left" size="xlarge" nocrop="true" clear="true"]

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