Given all that has happened this year, I was more than a little surprised by Robert Marcin's statement yesterday that retail ETFs were approaching their 2007 highs. With the dramatic declines in revenue and earnings across much of the sector, that did not seem possible to me.

As a value investor, I do not trade ETFs and only track the First Trust Community Bank Fund. I went and checked and found to my surprise that indeed, all of them were pushing back to levels they had seen since the meltdown began. Given the weak state of the consumer and the fact that I do not think conditions will change anytime soon, I got very curious and went looking at individual retail names.

With the exception of a few ventures with the casual dining stocks, I have not done a lot of shorting this year. After the rally we have had and the fact that I do not believe the economy or future risk to it are priced in this market, I have been thinking of putting a few on my sheets. It appears that there are some retailers out there that fit the bill nicely.

As always, when I talk about shorting, keep in mind that I am the ultimate "chicken short." I use put spreads to put on my trades to limit risk. I also use a small portion of capital. I am looking for asymmetric payoffs where, if I am right, I make a lot, and if I am wrong, I only lose a little.

I found quite a few retailers that fit the bill. One where I am looking to put on a trade is Urban Outfitters. I shorted this stock in 2007 with wonderful results from valuation levels similar to today's. Make no mistake about it: This is a well-run company. That fact, however, is more than priced into the stock at current levels. A P/E ratio of 31 on trailing earnings and 23 times the optimistic expectation is priced for perfection in an imperfect world. Although revenue was up last quarter, same-store sales were down 2% year over year. In addition, insiders have been selling stock this year as the stock price has risen.

Abercrombie & Fitch is back to being a Wall Street darling as well. The stock has catapulted upward since its recent earnings report. I am not sure what report traders were reading, but that report was awful as I read it. Same-store sales were down 22% while profits fell 39%. Total sales were down 15%. I don't really care what the notoriously inaccurate Wall Street analysts had expected; those are less than stellar operating results. The stock is not priced for perfection; it is priced for pipe dreams. The stock sells at more than 45 times trailing earnings and 23 times the "guesstimates" for next year. This is far too high for a company that has declining sales and profits, in my opinion.

Dick's Sporting Goods is another company that has had a tremendous run this year. In the last 52 weeks, the shares have better than doubled. Same-store sales and profits are down a little less than at some other companies, but they are still down. I really do not see demand for sporting goods picking up anytime soon. Treadmills and golf clubs are pretty far down on the spending list of a scared consumer. There has been strong insider selling in the stock, with over 1.6 million shares sold in recent months by officers and directors. At 22 times earnings, this is a good sale at these levels.

For some reason I never found my way into the Ed Lampert fan club. I have never viewed Sears Holdings as a collection of valuable assets. I find it to be a collection of second-rate stores. Sears has been in decline for years, and Kmart is destined to run behind Wal-Mart and Target forever.

Given the current commercial real estate market, if Sears has not looked for a way to monetize its real estate by now, it is not going to do so in the foreseeable future. Sales are expected by most analysts to continue dropping for the next two years. The stock trades at almost 50 times the expected profit levels. Tangible book value offers no real price support either, as the shares trade at 3 times that number. I believe the stock is an excellent short as it approaches its 52-week highs.

I will be looking to put on put spreads with good risk/reward characteristics in these stocks over the next few days. The consumer is not on the verge of a dramatic comeback, and these multiples are too high, given the current economic background.