Charts of Note
- Thread starter darkhorse
- Start date
The reward to risk definitely favors bearish trades right now, but we can't totally ignore the grind-up price action.
A couple of areas to think about from a bullish perspective:
- Oversold stocks where the bearish story has already been realized by the mainstream and sentiment is already very poor... Take a look at how JCP traded on Friday after a truly horrible earnings report...
- Yield plays where income-hungry investors are stepping into dividend paying equities because they can't get decent yields from fixed income funds... IP is a good example of a high-yielding stock that is attracting capital - upgraded this morning by CSFB
- Flight to safety stocks, or names that equity managers will buy because they MUST remain 100% invested regardless of the market. These managers are more likely to buy stable blue-chip names from a defensive posture - which may help to explain why the Dow is performing so well.
So no arguments here except that it's never wise to be totally 'committed' to one side of the market. Save your loyalty for friends and family, and be much more flexible when choosing trades...
Doctor Copper... the doc ain't lookin' so hot
Via http://www.ritholtz.com/blog/2012/08/dr-coppers-head-shoulders/
Abercrombie makes for a tempting short heading into earnings season...
On August 2, Management lowered annual profit projections, and guided analysts to expect lower same-store sales in the second half.
Consumer weakness in Europe is a major issue...
Current expectations are for EPS of $0.17 for the quarter on $997m in revenue. For the year (Jan, 2013) analysts expect EPS of $2.56 on $4.40billion. For FY Jan '14, EPS are pegged at $3.12 on $4.71B
So what happens if ANF is no longer a growth company? A single digit PE could still send the stock 20% lower...
The light-volume drift to fill the gap (and right into EMA resistance no less) creates an interesting inflection point ahead of the EPS announcement.
Limited Brands (LTD) pushing into resistance ahead of EPS after the close on 8/15.
Today's high-volume action is interesting as the stock initially spiked (a fund loading up ahead of the announcement?) and then settled back down.
Forward estimates put full-year earnings at 2.84 (Jan, 2013) - which means the stock is trading at a 17.5 PE - a pretty hefty valuation considering the weak global consumer and the huge size of the company (more than $10 billion in annual revenues).
The August $50 puts are only a buck - not a bad reward-to-risk scenario...