Disappointing earnings beat the pants off this kids apparel stock. How do you trade it?
Discussed in this article: Abercrombie & Fitch Co. ( $ANF )
Today we’re going to look at Abercrombie & Fitch ( NYSE:ANF ). They announced earnings that were, let’s just say, not that good. The stock had closed at 47.00, opened up in the morning at 37.00. The Fitzpatrick name for Abercrombie & Fitch ( NYSE:ANF ) is “Pants for Pedophiles.”
If you’ve seen some of their ads it about makes you want to vomit, and if it doesn’t you really need to do some deep soul-searching. If you look at the 5-minute chart, we can break it down into 1-minute charts but I’m not going to. I don’t really think we have to. The stock opens up first thing in the morning; it’s had a huge gap, ten points. Ten points on Priceline ( NASDAQ:PCLN) is not that big a deal. Ten points on a $46.00 stock is a big deal.
So the stock gaps down and what you’re wondering is, is this going to gap and snap? Meaning come back up, or is it going to gap and crap, where it gaps and just keeps on rolling down? You could see right away that Abercrombie ( NYSE:ANF ) was going to start moving higher.
You can actually buy this stock early and then as it turns out really just kind of hold on to it for the whole day. It zigged around a little, but really not in that great of a trading range. But if you look at it now, back on the daily chart, what you going to do with this stock? There’s going to be a whole lot of resistance going on here, a whole lot of resistance.
So if the stock has some upside that’s fine, maybe it’s got one more day of advances, but I’ve got to tell you, when I see this kind of massive selling and this kind of move this is all institutional distribution.
Do you really think that the stock gets slammed like did here, now it’s up at 38.50, and some big fund manager is going to come in and say, Wow! I’ve always wanted to buy Abercrombie & Fitch ( NYSE:ANF ) down around $40.00 or so? I love little boys with their shirts off and their pants hung low; it’s like, this is what I want, I’m all in. No, you’re not going to see that, I don’t think you’re going to see much upside here in this stock.
So if you took this, take it for a day trade, then get rid of it tomorrow and move on to something else that’s working, because this is definitely a broken stock; there are other retailers out there that are working just fine, this isn’t one of them.