More Strength In Retail
Apparel retailers acted well Tuesday,
showing the kind of price and volume action that often precedes earnings
improvement ahead. Even if you miss moves in these individual stocks, their
action can help you zero in elsewhere in the same group.
Hot
Topic
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PowerRating) surged 2 5/16 to a new high of 24 7/16 on fast trade,
following through on the prior session’s bullish engulfing pattern. The City of
Industry, a Calif.-based company, sells music-influenced apparel through several
hundred mall-based retail stores. The stock looks extended here.
Talbot’s
(
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PowerRating) is acting
constructively. The stock gave up 1/2 to 49 7/16. It appears to be putting in a
tight handle here. The Hingham, Mass.-based company describes itself as a
specialty retailer and catalog seller of women’s and children’s classic apparel,
accessories, and shoes.
Note the powerful accumulation on Jan.
3 (see Point a in the above chart), then a
follow-through advance, then a nice dry-up in daily volume, and contraction in
daily price ranges. That’s a sign that shareholders are sitting tight, resisting
the temptation to take profits.
All stocks are risky. On
any new trade, be sure to reduce your risk by limiting your position size and
setting a protective stop where you will sell your buy or cover your short to
cap your losses in case the market turns against you. Never trade without a
complete money management plan. For an introduction to position sizing and
stops, see my lesson, see my lesson,
Risky Business. For more information on money management,
check out the Money
Management area of TradingMarkets’ Stocks Education section.