There’s no denying the retail sector was hit particularly hard in the past market cycle, but I don’t believe we’re necessarily at a market top. Furthermore, I tend to focus more on soft line retail and while the selection of brands for an investment portfolio is subjective, it’s easier to differentiate the higher label brands when compared to the non-performing retail names that are clamoring onto the last bits of their remaining life (Gap Stores, Aeropostale, JC Penney). The names that particularly stood out in specialty retail were Victoria Secrets and Bath & Body Works (both owned by L Brands), which reported same store sales at 8% and 6% growth respectively. The two companies beat on consensus SSS estimates for the month of December by a margin of 3.7% and 1.5% respectively, according to Wedbush Securities. The key takeaway with specialty retail coming out of the season was the winners piled on and the losers continued to struggle. However, some notable mentions were Abercrombie & Fitch and Lululemon Athletica (more on that in other articles). Source:Freestockcharts I can’t deny the SPDR retail fund struggled following the recent market sell-off, but I think opportunities do exist in the retail space, which I will briefly go over in other articles. Investors should be selective buyers from the lower market base, which will likely bottom out within a couple more percentage points. From there the high-quality or recovery plays looks interesting. Investors can’t bet on the entire sector though, as pockets of opportunities seem relatively limited and focus should be spent on the positioning of a trade relative to the entire sector, as strength and weakness in stocks will be heavily dependent on company specific fundamentals. Furthermore, I want to add that the relative volatility will likely increase as larger institutions will move portfolio allocations away from the weaker players into the stuff that’s more fashionable like Nike or Pink sweatpants.Literally, I can’t make this up. Buying specialty retail is more like positioning yourself to think through the spectrum of fickle consumers as opposed to parking money on a staple brand. Things change on a fly, and while I wouldn’t characterize the industry to be as fast moving as technology. I would say that investors can quickly position themselves based on the trendiness of specialty retail brands.