I've mentioned purveyor-of-skanky-wear retailer Abercrombie & Fitch many times in the past, and my post of October 11 highlighted it when it was above $70. It continues to tumble (much like it did during those charmed years of 2007-2008). It's down a double-digit percentage today.
Let me start by saying Amazon is one of the most, if not the most, well-run organizations I've ever known. We have done tens of thousands of dollars in business with them, and I can't think of a single unsatisfactory experience, even though there have been hundreds of opportunities. (This is in sharp contrast to Overstock.com, which I tried once, and I had a totally unsatisfactory experience, and therefore I shall never darken their doorstep again).
Anyway, AMZN broke a long-term support line last week.
Looking closer, you can see the damage was done on Friday. Given AMZN's huge run-up, the drop from its lifetime high looks like barely a blip, but the fact is that the stock is down 20% already, and it sure looks awfully vulnerable at these levels. I don't have a postion, but if it retraced to that trendline, it looks like a very high probability trade.
In honor of the 10th birthday of Apple's retail stores (which, at the time, a lot of analysts thought was insane), here we have Mr. Steven P. Jobs himself giving you an enthusiastic tour of his latest creation:
My best-performing short today was Aeropostale (ARO), which I've been building a position in for a little while now. It's down over 15% today, and although I've covered the position for the moment, I'd be very interested in re-shorting this on any bounceback. I think that, over the long term, it's going to head closer and closer to $zero.
SPECIAL NOTE - Sometimes I complain that there's not much in the hopper. This is currently not the case. There are probably ten posts waiting in the wings, and more to come. They are going to get increasingly stale, but unfortunately, I'm quite busy this afternoon, so you could be stuck with this post for a bit. When I do manage to issue new posts, I probably won't be able to say NEW POST, so you'll have to rely on your wits (and other Slopers) to figure it out. Be strong.
What a week! A shock event is now on the charting landscape from Tuesday to Thursday, and a quick 50% retracement took place on late Thursday afternoon and all day Friday.
A Bit Of Technical Analysis
Technically, the market charts still appear more bullish overall than bearish, and not enough technical indicators have rolled over in bears favor. However, the unending market grind up for 2011 was finally broken this week. As a result, the first pull back of the year (5% to 6%) took place on many index charts, before eventually bouncing on Thursday afternoon.
The next week should reveal whether the gaps down formed on Tuesday can be closed. Personally, I am not convinced that would happen because of most of Friday's price advance came only from two areas - small cap's and tech (which was led by the $SOX). Here are some charts, and they reveal quite a few contradictory signals.
http://tinyurl.com/4q8hnou (Broad divergence in a major technical indicator ... watch out bulls)
http://tinyurl.com/4gfr4nb (US Dollar hammered again by the Euro and this saved equities)
http://tinyurl.com/4j5afey (How I would generally define the current technical scenario)
http://tinyurl.com/4cay4en (Retail is looking more ready to roll over ... the ledge is clear)
http://tinyurl.com/4thjvfh (Money flowing out of equities and into bonds)
http://tinyurl.com/4v5wwa6 (2250 looks like a magnet, and a failed IH&S would hurt bulls)
I noticed that the US Dollar's weakness prevented a stronger sell off in equities this week. However, I saw many divergences on the tape's rise Thursday and Friday (including transports, retail, banking, and cyclicals). Not all boats are rising on the two day retracement. Overall though, this last week made all traders more aware that (1) the markets cannot continue to go up forever - even under QE2, and (2) the world stage is becoming unstable enough to cause more jitters in the markets and their underlying economies.
Personal Outlook (Where's My Money?)
I would finally add that this market is NOT similar to the market tape in May 2010, so I would NOT expect a flash crash in the short term. I am individually short GOOG, PCLN and INTC (no longs). I especially like PCLN in the short term here. The run in tech the last two days looks very false to me. On Friday, I traded in and out of these three swing positions to improve and lower my average entry prices and/or increase my exposure. On Monday, I would note that there are a lot (really a lot) of note auctions and note settlements. This usually creates a noisy day on the tape with corresponding bond yields artificially pushed up, so Monday may not be worth trading at all (for either side). ST bulls may want to consider quickly take profits and just standing aside.
If interested, you can see my daily tweets here (@facesincabs) and my blog posts are stored at http://facesincabs.typepad.com. Good luck with your own trading.
