Dow Jones 13634.69 +14.80 9:54 am PST, December 7, 2007 NASDAQ 2706.20 -2.83 For info, visit access.smallcapnetwork.com S & P 500 1508.42 +1.08 Change your subscription status here Russell 2000 786.36 -0.59 VOLUME 07 : ISSUE 114 Tenet - No Complaints So Far It's been less than a month since we picked Tenet Healthcare (NYSE: THC), but we're already up 41% on the trading idea. More importantly, however, it appears as if we've broken above a temporary ceiling. Maybe now we can proceed all the way up to our target gain of 88%.  Just to recap, we became interested in this trade on November 7th when the stock made a high-volume break above its trading range. Always leery of buying into a one-day wonder, we waited to see how much staying power the move really had. Needless to say, the follow-through over the next couple of days was convincing. Our official 'entry' level from the November 10th newsletter was $4.06.  Tenet followed through nicely on the 12th, pulled back to $4.00 area again in mid-November, and then pushed off of its 20 day moving average line to end up where it is now.  I have to confess I was a little nervous at the end of November and early December when THC stalled around the $5.50 level. It wasn't so much that the stock was taking a break (it certainly deserved it). Rather, my worry was how the stall occurred right as the 200 day moving average line was being retested.  Not that yesterday's blast past this long-term indicator line puts my mind completely at ease, but it's a step in the right direction. We have a pretty big cushion now.  Given that we have an unrealized gain of 41% on Tenet, I think it's time we start thinking a little defensively. I don't want to officially change any numbers (like the stop or the target), but I do want to keep $5.27 in the back of my head. Why $5.27? That was the low point for the temporary stall last week, and may be significant to the rest of the market. If it fails to hold THC up with a subsequent retest, I may be inclined to go head and lock in what I had in the way of gains.  It's also usually at this point I'd start locking in partial gains (and I still might). In this case though, I like the odds of getting up to our target of $7.67. I think I'll hold the whole thing for the time being. By the way, the move past the 200 day line could still be a good entry point for anybody who missed the first part of the rally.  On a side note, I think the Tenet trade is a reminder that 'trade management' is as important to your trading success as stock-picking is. Though we didn't make any adjustments just yet, we sketched out a plan for doing so if the need arises.    Retailer Stocks Climbing a Wall of Worry? On the weekend after Thanksgiving we published an edition titled 'Will Black Friday Make Investors Blue?' The question was simply one of whether or not the first heavy holiday-shopping weekend was going to set a bullish or bearish tone for the rest of the season. My vote was bullish - I thought investors were underestimating the strength of consumer spending for the rest of 2007, and I saw a lot of value in retail stocks. Though it's only been nine trading days since then, so far the theory looks correct - retail stocks have done quite well, outpacing the overall market.  Just for the record, the S&P Retail Index (RLX) is up about 6.1% since the Monday after Thanksgiving, while the Russell 3000 is up about 4.0%. That's not 'leaps and bounds' better, but significant for a short period of time. More importantly, I think it's a hint the rest of the market is starting to catch on to the idea of undervalued retail stocks. You may recall the two areas I liked best were electronics retailers and apparel retailers. They're up 6.1% and 5.0%, respectively. I still like them both for the near-term. Best Buy's (NYSE: BBY) new-found strength was magnified - shares are up 7.5% since then. Even Circuit City (NYSE: CC) pulled out of its rut and found a groove - those shares are up 9.7% since that all-important weekend. Maybe, just maybe, that's the boost CC needed...though it's still a question in my eyes. And clothiers? A little more hit and miss, but still strong. Urban Outfitters (NASDAQ: URBN) is up 17.8% in less than two weeks, though Aeropostale (NYSE: ARO) is slightly down since the Black Friday weekend. Even the one area I didn't like - department stores - are doing ok. They're up an average of 4.7%. Despite the results, I'm still not crazy about this segment of the industry.  So what gives, especially in light of yesterday's poor numbers for November's retail sales? Like I said, I think the market went overboard and assumed early November (and a low consumer confidence figure) was a proxy for late November sales, and decided to dump retail stocks. In other words, a poor November was already priced into - or perhaps overpriced into - retail stocks by the time we got to Black Friday.  Even though the retail sales report was a mild drag on the sector yesterday, I think the past week and a half has already set a new tone for this group.  The most compelling argument for me, however, is the lingering pessimism about holiday sales - a lot of analysts still fear the worst. Personally, I think retailer stocks could keep climbing that wall of worry. One last thing...barring any unforeseen changes, we should have a very exciting edition for you on Monday. I don't want to say too much, but some significant news about one of our focus companies could add major layer of credibility to their story. And more importantly, I think it could give the stock a nice shove.  Have a great weekend everyone.     We Value Your Feedback   Got comments, questions or suggestions? 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