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A Tale of Two Retailers

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Red is the color of the day, since most sectors are in negative territory. Technology sectors, especially networking, is down the most, but Oil service stocks continue to get a little relief from their recent sell off, up 2.65%. Brokers are the only other sector in positive territory, but barely. Retailers are down 1.35% after some mixed announcements from Federated Department Stores and Dollar Tree.

Federated Department Stores Daily Chart

Federated (NYSE:FD), which runs Macy's and Bloomingdale's, trimmed 25 to 35 cents off their second quarter estimates, and lowered its full-year outlook. No longer citing short-term concerns like poor weather, Federated blamed the slowing economy for its woes. The news has the stock trading lower by $2.83 cents, and now below the 200-dma. Support was found at $37, the yearlong up trend line, and January low. Some support can also be found at $35, but if that level is lost, there is not much to stop a freefall.

Dollar Tree Stores Daily Chart

Based on Dollar Tree's (NASD:DLTR) second quarter 14.5% increase in net sales, and 35.5% gross margins, consumers must be looking for bargains instead of pricey apparel at Bloomingdale's. DLTR remains cautious about the second half of the year due to uneven customer traffic flows, but the stock is still up $1.41.

That puts DLTR back above the 200-dma for the first time in seven months. DLRT's recent run has had some good volume support, but could meet some resistance at $30. Just above that is some more resistance at $32.25. Looking into the future, DLTR could ascend to $45, but that would be a very optimistic target.

Jeffrey Canavan

QLogic's morning rally might have ended

This morning's put play of the day on OptionInvestor.com in QLogic (NASDAQ:QLGC) saw the stock rally after opening lower, but that rally may have come to an end. In the "hot list" on OptionInvestor.com we had traders flip their charts to a 30- minute interval (like the one below) to help try and determine an action point where we might expect weakness to occur. We felt the weakness we were beginning to see in some of the broader technology indexes and sectors should have a trader looking bearish on the stock short-term.

QLogic Corporation Chart - 30-minute interval

The first target for a bearish trade in QLGC would be the 200- period MA on the above chart at $56.21. A swing-trader may be targeting the "fitted" retracement bracket and the 61.8% retracement level at $46.41. Notice that QLGC did get above the 100% retracement level which was a RESULT of anchoring the retracement bracket at the recent lows of $17.81 to the first pullback on April 24th at $34.80. If you're thinking percentages, this stock has jumped nearly 222% from the lows and might experience a bit of a pullback from current levels of $58.90.

Jeff Bailey
Senior Market Technician
www.premierinvestor.net

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