AnnTaylor — An Example Of An Unexpected Move
Prudential reiterated a
buy rating on AnnTaylor Stores Corp. (ANN)
yesterday (8/13/01), but the stock did not perform well at all, as you can see
on its daily chart below. ANN is still trading below its 50-day moving average,
and its 50% retracement level of the May 17 high to the August 7 low is just
above the 50-day moving average. ANN has a TradingMarkets.com
3-month RS ranking of 29, and this low number indicates that the stock has
been an underperformer.Â
In spite of apparent weakness, ANN
staged a surprising rally in today’s session (8/14/01). This unexpected move was
probably caused by the strong performance of the S&P Retail Index (RLX)
earlier this morning. The chart below is a five-minute chart of ANN. (The bottom
line indicates the level of the 50-day moving average, and the top line shows
the 50% retracement level.)Â
ANN gapped on the open, and the
first unsuccessful challenge of the 50-day moving average came at 10:25 a.m. Of
course, this breakout failure provided a short-selling opportunity, but in
reality, it would not be easy to sell because the stock was exhibiting strength.
At 12:40 p.m., ANN took out both the 10:25 a.m. intraday high and the 50%
retracement level. By 2:50 p.m., the issue hit 35 and began to pull back.
As I often say, traders have to be flexible. If we were too obsessed with the
idea of short selling, we would have missed excellent buying opportunities. Even
though the daily chart indicates a downtrend, we should learn to ride on the
intraday uptrend. Again, always place stops on every transaction to protect your
positions.
Till tomorrow,