echotoall.com Blog

J. Crew declined some 20% today as they beat the street, but issued their warning.  JCG has one of the best management for clothing retail, and if they are hurting the generic big boys do not stand a chance.

For this reason I shorted RTH. Anyone who thinks the consumer is not suffering, and simply listens to ‘pretty-packaged-economic-data’ (because of seasonal adjustments) is kidding themselves to the real conditions out there.

RTH is also technically at a resistance point, and getting oversold.

If it rallies, I can see a potential move to 98 as per the chart, I will short some more.

I sold a bunch of my PWR.  IMO, the 32 level is a major resistance point. It may see a solid consolidation before it continues its rally.

Don’t get me wrong, I still really like PWR. Especially for the macro backdrop. The wind is really at its back (especially from the wind farms they are helping to build and get connected to the grid ).

I will most definately buy back on the pull back, and post when I do.

NYX – this is the oversold position I am focused on.

Over the past year (above is only an 8-month chart, but I did look into it for a year) when the red line of the slow stoch is so grossly below the 20 mark, a bounce is typically seen. The exception was with the poor earnings showing earlier in 2008. The current decline is not from any solid reason, with the exception of the negative implications stated in my previous post. The degree of the bounce is in question, but the SMAs may act as resistance, with high 66 the first resistance level. (this is what drove me to close out the protection)

MA – I took on a call options as MA came back down, around 274. I covered the trade today around 282, yet am feeling a sense of ’sellers remorse’.

Seems as if there is a few more points in MA. Mid 290 seems likely in its push upward.

(Sorry for not posting the MA trade, but I thought it might get complicated like last time, and viewed it as a high risk because of the set up. I posted the NYX trade instead because I thought it was to be straight forward… fate does mock sometimes.)

NYX is oversold, and seemingly inexpensive…

I did take out some protection. If NYX is going to bounce from its oversold position, then 67-69 maybe seen via the SMAs. The Calls will be closed out there. If NYX breaks down, I will close out the puts in the high 50s. Pending on which way NYX goes first (to support or resistance), I will double down on the Puts (at high 69s) or Calls (at high 50s)

If NYX breaks high 62 (there is a ‘day traders’ support there), it will see the high 50s.  The action is tough to watch, especially since I was not expecting such weakness from the name.

It looks to be trading as if earning estimates are too high, and re-pricing for much lower estimates.  As it stands now, it seems inexpensive with a PEG of 0.90, and the fact that is crushed estimates last quarters.

7 straight down days, and a grossly bearish chart is tough to stomach.

Also, I am not a fan of the conflicting indicators I am seeing via the charts for the overall market. So prudence dictates protection against the NYX trade, or to close the position.

I am thinking about the July 65 puts as protection. (although it pains me to protect something so oversold and inexpensive)