Just because I saw some market volatility on the horizon doesn’t make it any easier to navigate.

The wild ride in our retail calls is a microcosm of the rotation taking place in the market. Whenever the stock market enters a phase of rotation, where investors sell one group of stocks and move into another, the cross-currents can be unpredictable and frustrating.

I believe that’s what happened this week with our retail calls on Dicks Sporting Goods (NYSE: DKS), Target (NYSE: TGT) and Williams Sonoma (NYSE: WSM). Although we managed to score quite respectable 37.5% and 42% gains in the Dicks and Williams Sonoma calls respectively, the action in between was not what I expected.

The storyline of each earnings report was similar. Each one beat earnings and revenue estimates for the current quarter and provided bullish revenue guidance for the December quarter. However, management warned, profits would be under pressure due to increased spending on e-commerce and marketing programs.

Most frustrating of all was Dicks, who backed estimates for the fourth quarter but warned that fiscal 2018 profits would bear the burden of increased investments.

Dicks dropped 3% on its earnings report on Tuesday. Target dropped 10% on its earnings report on Wednesday. When I saw the Williams Sonoma calls trading up double-digits before its Thursday afternoon report, I decided to book a gain instead of betting on a warm market reception.

I think that part of the rotation happening in the retail group is that value players are selling the stocks based on lower than expected earnings and momentum and growth players are buying the stocks based on stronger top-line trends.

My instinct is to add more retail names to the portfolio, especially those that have already demonstrated the ability to grow sales in turbulent retail times. Increased spending on e-commerce and marketing shows me these companies are willing to sacrifice some short-term earnings to cement their position with customers.

When a company is growing revenue well, it typically has a lot more wiggle room to generate higher profits. I don’t like being short companies with accelerating revenue growth for this particular reason.

We still hold the Target calls, and I expect they will generate a profit as investors recognize the company’s ability to grab more of consumers’ holiday budget this year.

In between basting the turkey and welcoming family home, I’ll be working on some new names for the portfolio. Stay tuned!

Happy Thanksgiving to all.

Around the Portfolio:

Gap Inc. (NYSE: GPS) The Gap earned 58 cents per share, $.04 higher than estimates with sales beating estimates by $80 million. Most importantly the company reported 3% growth in same-store sales, significantly higher than the 1% expected.

Old Navy, the company’s value chain which makes up almost half its sales, enjoyed 4% comp store growth. The company’s namesake Gap stores had their first positive comp since the fourth quarter of 2014, an encouraging sign for future profits.

Ichor Holdings (NSDQ: ICHR)’s two largest customers reported bullish earnings last week. Lam Research (NSDQ: LRCX) and Applied Materials (NSDQ: AMAT) both delivered barn burning earnings and guided that each would need to continue investing in new equipment to satisfy demand.

Also, Ichor named Jeff Andreson as its new Chief Financial Officer. Mr. Andreson, 56, brings to Ichor over 25 years of financial leadership and management in the capital equipment industry. Since 2014 he has served as CFO of Nanometrics Incorporated, a leading provider of advanced process control systems.