Tween retailers provide a glimmer of hope for the retail sector

Following in the same line is Abercrombie & Fitch (NYSE: ANF), which reported a substantial 18% decline in same-store sales. However, expect some rejoicing as expectations called for a drop of 20.4%. Watch for ANF to turn in respectable performance rather than dropping as one may expect after reporting an 18% plunge in monthly sales.

Actually, while I focus on the companies that didn't do as bad as many thought, Aeropostale (NYSE: ARO) turned in an excellent month. This teen/tween retailer saw same-store sales increase a tidy 19%, far better than the expected 12.4%.

Of the three mentioned retailers, ARO has the easiest technical road higher. The shares are currently positioned in the $43 region, with little-to-no overhead resistance standing in the way. AEO and ANF both face overhead resistance and didn't turn in as good a report as ARO.

I expect these results will improve in October, November, and December as these retailers will drop prices for the Holiday season, and parents will want to find affordable gift options for their kids. Expect this scenario to play out across the entire retail sector. My one concern is that the companies may drop prices so low that the action will cut into their bottom line, but that is a bridge we will cross when the time comes.