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could get and -- ♪ retail stocks have been all over the place this month. and brace yourself. because our resident chart mast master says the space could be in for even more volatility. the action begins now. >> as the market has called to new highs, inhaves tors have been running out of the so-called safety trades. utilities down 5 and 6%. with the possibility of a september hike on the table, could it be time to get back into these so-called safe haven assets. mike? >> well, not all of these are created equal, so some of the places where people have typically run for safety including consumer staple stocks and thins like you tiutilities, valuations are looking rich even at the current level, but there are places where they don't and

you were talking about telecom. this is an area where yields are high, but the valuations extraordinarily high. if your attitude is that you should be greedy when others are fearful. maybe this is in fact the time to step in. >> telecom, the sector, is really two stocks? >> effectively. almost all have that issue common and chevron, obviously in t teleco. zpl i think verizon and at&t were two stocks that traded sideways. over the last six months, we have seen both stocks run up to all time highs on little or no news. the only news was interest rates were going lower. i would submit the valuation, maybe not that rich, but it's not cheap other, so i think

there's more room on downside. i'm bull by the way, but i think the market will shoot first, ask questions later. >> if you were a bond bull, how can you not like stocks that are yielding more than the bond markets are and as far as how expensive they are, i'm trying to figure out what expensive is. with the bond market trading 13 time, probably going earn four bucks in eps. >> historically speak, i think they are expensive. given the norm for the stocks over the past ten, 15 years. i am a bond bull, but i don't think the rest of the world is is, so why i think they're going down is because the world is baeshish bonds and the sell off. zpl they're not vulnerable to a strength in the dollar where some of the big interstashl staples are. zpl even tech. >> i think a lot of people would give up toilet paper before their cell phone. so this is one of those places. you think staples are a safe place to be.

i mean, try to rip the phone out of your teenage's hand and see what happens. >> me neither. >> you can buy the november 52.5 a calls and spend just over a dollar for that. you're spending somewhere in the neighborhood of 2% of the current price that's going to be profit bable if the stock even moves marginally through that stip. if guy is right, if the stock pulls back, it puts typically trades at big premiums. you can have an opportunity potentially to sell a put for as much you spent for that call, maybe more. so you have an opportunity here to risk little to make it if it does continue higher but, if it doesn't, you have ways to play around it. >> let's get the technical analysis. >> looks great. there's two kinds of weaknesses. weakness stay away from. >> just to put in context, we

know there's in hyper rotation. we know money has come out of these so-called high yielding. verizon down 5.8% over the past month. just to put it all in context, staples, bonds and then the market. you could draw your lines anywhere you want. the first thing my eye sees is this. again, could draw your lines where ever you want. to my eye, that looks like a good trend line. you've had a pullback level where the potential is high. down to a trend line. i think this is a good time to take advantage. if you've got a yield versus a

ten-year of 16. just to put that into context, that's 2.7 times that of the tee bond and look at this relative dividend yield. it's not the abts absolute yield. it's relative to ten-year treasuries. you're trading almost three times that and this dividend. they pay out 225, they make four. well covered. so, to my eye, i think you make a bet here that verizon is a play for a bounce. zpl last quick word. >> you just hit on the most critical issue. a lot of issue where is you have high dividends. basically, they're levering the balance sheets to continue to cover them. that's not true in n this space. >> let's get to a big mover. health care. the xlv health care etf dropping 2% and seeing more than five times the average daily put volume over mylan's dramatic price increases on its epipen.

health care is now the second worth performing ser tor behind financial, but could a recent sell off present a buying opportunity. mike, you see value? this is one of the weakest perform sectors we've had all year and some of the cheapest stocks lined here. the situation is a tough one. they've got about $10 billion in revenues. and a much larger percentage of their profit. so that is a place where i think it's probably a little bit dangerous even now, but csc, really? cvs is still quite cheap. i don't think these companies deserve the kind of punishment they've received. basically took it on the chin. express scrips, there's two issues there. we highlighted some of the put issues there. you know, i don't think everybody needs tok take ben out

to the wood shed. we're dealing with an environment where fundamentals aren't the driving factor. s this is not a fast money, but if you have a time horizonen, they'll get through this. they'll figure this out. maybe they haven't done everything correctly, but mylan will get through this. quickly though, the one place i would go to for value is the bio tech index. 285 has been a pivot for monlts and if you look at where it closed today at 285, i think the risk reward sets up well on the long side. one we know it's parking lot of the rotation out of sort of safety, so it's being caught nup the teleco, but recent head license. hillary tweeted, it's under pressure, but ultimately, it

gets down to whether one believes this is appeared to be aggressive with equities or cautious and i think this is a heads you win, tails you win kind of proposition. health care will go down less if the market continues lower and if it's going to gain traction, this is a good a place to be as in. >> it's not really -- not going to happen anymore. the 660 milli$660 million, that going to happen. it's not a situation where you're talking an old market and marking it up. that's a safer place and cvs is not in the same business. >> you don't think congress is going to shine the light on every part of the chain? >> whole reason that there's

able to charge $608 for two epipens is because they have patent protections. >> i'm talking washington. >> the reason why nothing happens in washington on this issue, where would the blame fall. >> they're going to get their trades off first which they're allowed to do. wow, got a question, send us a tweet. for everything options action, check out our website. we've got the hottest options news, videos from throughout the week and exclusive trades. while you're there, check out our super cool newsletter. here's what's up next. ♪ >> that's what investors have been asking about spres rates, but the answer might not be what you'd think. plus, investors have been flooding to a number of retail stocks this month, so why is the

space still underp perform ng the market? >> i don't know. it's a mystery. >> not exactly. and we'll explain it to you. when options actions returns. id adffices. ever tma meovf, id what areouorking on? adffices. t me show u. okay. our rswim ing platfo you in onace anlets egatyou visualize thata rmatn for any s ri ay, cool. hang on a seco yoeven see t anticipated range ofof stock expectinrn. range ofof stock expectinrn. impressive... what up, tim td amee.

hey ry, at are u ing? oh hey joh i'm connecting our bra we can share our amazing tradg owledg at's a gre idea, ing? ohbuwhy don't yojuo to connthinkorsm'chat rooms where u n share sttegi, ideas, even tual trades wi markeprofessionaland thousand otherrade? i know. your brain td my brainbf m, blueberry?? to thenowledge of r trers on thiorswim. only at td ametrad zblmpblt welcome back. we're winding down earnings season and that means that retail stocks dominate the head license. the picture has been mixed with our fair share of standout upside and downside performers. over the last month, the consumer discretionary sector has been a relative underperformer and the same can be said of retail names outside of the large cap world. if you look at the retail etf,

it tracks a wide part of the industry small to mid to large cap stocks. we took a look at the index members that have made large youp cyd side or downside moves in the shorter term. there's nearly 100 names and some have rallied so strong tli, they're around 20% of more their average price over the last 50 days. those names include best buy, grew upon and urban outfitters to name a few. on the flip side, there are some stocks still well below their shorter term average prices and they include stocks like dollar general, gnc holdings and hsn. so, the question now is whether there's at least a shorter term trade on a resal of these trends or is the momentum sustainable. remember, we get another notable report for retail out of lulu lemon next week, so melissa, we've still got to keep an eye on retail earpinnings just a lie longer. >> thanks, don, have a great weekend.

despite the big moves we've seen, carter says there could be trouble ahead for the retail sector. >> this is a perfect set up. trz got these almost schizophrenic moves. hyper rotation within the sector and yet no progress. take a look at some of these names. nordstrom up 17. tiffany 16. names you know. big, big moves. and yet, with that help, you're still not moving. consumer discretionary sector and xrt not progressing, so i want to set it up with a overall sector. what we know is we've got just to a slight new high and we're struggling, but as that's happened, one could say yes, i did well. i made money. sort of at a professional level if you will or if you're running a fund, it's a zraser of a pick. up half as much as the market. this relative performance is a

big problem. up on absolute basis, but less on the market. then sub sector within that, here's xrt. it's walmart, amazon, the whole thing. . and xrt is underperforming. not good. after best buy and tiffany all gapping up. not moving the aggregate. so, long-term chart, you could draw the lines however you want. the first thing i sort of thought jumped out was this. a clear trend line. we've responded to it beautifully. we undercut it and now, we try to get back, we fail and now, we're struggling on to the trend line. i think that's what's going the happen. so, where to?

i think you're going fail. you're stuck then it's going to break this trend and head lower. so whether you look at it short-term or long-term, not good action. not good relative action and we've had a lot of contributing strength and it hasn't helped the story. >> so, mike, you've got a trade. you see it going lower. >> look at the names in this space. basically, the thing that has propelled most of them higher has been it's not as bad as we thought it was going to be, which is a very different thing. the only good news in the best buy story, same store sales hung in there. the 24% online sales growth was the one meaningful beast, but not that meaningful when you consider that ultimately, they're still competing with the alisons amazons of the world. the situation is, how much of their revenues are still coming from online. the same is true for everything

else in retail. macy's or in order strorms or tiffany's. they're not your friend and then dom was mentioning lulu. i always usually holly index because she love to buy things at lulu. actually, i haven't been seeing that on my credit card receipts lately so, that one, the one i've had to support because it met my holly index, it's trading close to the all the time highs. >> what's on the holly index now? is that the next great trade is this. >> juiceland and starbucks remain in there. >> on your card, holly is more than capable of having her own card and i know she's watching. >> questionable. any way, your trade. >> december 45 puts. spend less. about 1.90. that's actually not that when you look at it relative to the cost of xrt, but isn't that bad when you think about how volatility is priced generally. if it pulls back, you're going to have an opportunity to try to

look to spread and that's what i intend to do. we've got time as well for this to play out. people are going to start getting an indication before these expire of how holiday sales are going as well as earnings coming out next week. >> how does seasonality factor? >> i don't do a lot of work, i think it's something everyone does do and maybe there's insight there. people do it with gasoline and summer drivering, consumer and tax receipt, whether you get bad credit. that should be synthesized in the chart and i think it is. we've heard from this area. this area is lacking in peek peak employment. >> that's not a guy index. >> i'll tell you what's on my n index. i was at short hills mall the beginning of the month. walked by saks fifth avenue, they're closing the store in the short hills mall. madness. you clearly don't care. >> we went tog. >> cheesecake factory, tesla.

macy's. i just recalled the whole -- >> did you see it yesterday? of course you did. you were here. stock got hammered. go back to may and look at where the stock took off from. they're up 8% year over year. you may have valuation in your favor and some activists start tog get in. look at the price target still. i think it's a good long side trade. >> up next, bonds, tumbling after janet yellen set the case for a rate hike later this year is getting stronger, but that doesn't bode well. we'll tell you why after this break. m herethe td atrade tr off. steve,er thaking meovstuff, what are y wng on? steve,erlehoyou. meovstuff,

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last month, kohn cart er thought bonds are about to break out. take a listen. . >> you break out and checked back. you want to play tlt for new highs. >> you want to buy the october 140, 150 call spread. spend $2.85 for that. >> janet yellen hinted we'll see a rate hike. >> it's a little blow where we started. i would say you stay with this. in my estimation, i don't think rates are going higher. we want to kick it down the road. >> one of the things we did when we put this trade on is had our eye on a september meet, one of the reasons we looked out to the october expiration. down about a buck on the trade. probably in the 1.70 range. that's a pretty cheap bet on the chance something doesn't happen

in september because if it doesn't, we get any other negative news or get a bad jobs report, what's going to happen to? >> it's going to go high. sharply higher. you're only risking 1% of tlt to make that bet. >> it was miserable. basically closed on the lows. not a good sign. even if the fed does raise rate, they don't control the back end. i think people are making a mistake. i think you'll see people look for a yield in the form of bonds and i still think tlt goes higher from here. >> banks were up today. so, ipg look, the rate environment is pricing in probably not a lot of movement from here. >> up next, your treats and the final call from the auctions pits.

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he tweeted and we heard you, specifically from evansville, metro. who asked bank of america stock price breaking out. >> about 400,000 calls traded today. the top ten most active options actually we're seeing call buying, so looking at a short-term move to the upside. >> what do you see in the chart sns. >> perhaps one of the best performing of the financials and large cap financials. better than goldman, better than citi. >> and let's get to stirp one. gld or gdx. maybe silver a nod? >> silver's okay. i think the gold miners are going to win. i understand gold's been beat up, but gdx will get you done. >> carter? >> get long verizon for a nice

bounce here and want to be short the other side. >> mike. >> november calls. verizon. >> thanks for having me back. dan nathan will be back in this seat next week. don't fret. >> our time has expired. thanks for watching. see you back here next my mission is simple, make you money. i'm here to level the playing field for all investors. there's always a bull market somewhere, and i promise to help you find it. "mad money" starts now. hey, i'm cramer. welcome to "mad money." welcome to cramerica. other people want to make friends, i'm just trying to make you some money. my job is not just to entertain but educate and teach, so call me at 1-800-743-cnbc or tweet me @jimcramer. every night i come ot here and tell you what happened touring the day, why it happened and what can you do with the information. i do