Credit Limits Will Likely Dampen Holiday Spending (TGT, SHLD, HD)

According to a report from Bloomberg which cites data from a recent survey by America's Research Group, retailers could lose as much as 8% of their holiday sales this season as lenders have recently clamped down on financing terms. Moreover, the survey suggested that almost a third of shoppers believe that banks have already cut spending limits on their credit cards, something that will certainly make it harder for retailers to score large dollar value purchases.

When considering several factoids: 35% of retailers annual sales are from the holiday season and about two-thirds of holiday purchases are made with credit cards -- the retailer picture looks even gloomier. With consumer confidence at an all-time low (as reported last week), it is hard to estimate what the market has already priced in for retailers such as Target (NYSE: TGT), Home Depot (NYSE: HD) and Sears (Nasdaq: SHLD).

Outperformance by the sector last week has traders feeling like the early-cycle retail play could be cleared for take-off soon, but could even more depressed levels of spending be the next shoe to drop? This year's "Black Friday" will be very interesting as the number of retailers who do move into profitable territory on that day will certainly be less than in any of the last 5 years.

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