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Abercrombie testing bullish support

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I've been less than bullish in recent weeks for shares of Abercrombie and Fitch (NYSE:ANF) as the stock looked to have been losing sponsorship. We did a lot of work on OptionInvestor.com talking about this stocks "bearish triangle" pattern and even looked at relative strength charts that indicated the stock was losing steam. Today the stock has achieved a preliminary target which was the bullish support trend. I've pointed out in the past that often times the bullish support trend is often times a level where institutions lie in wait to further accumulate a stock. There's hint in other "high-end" retailers though that this time might not be the case. Nonetheless, a trader must assess current risk/reward against previous risk/reward where a trade was implemented and proceed from there.

Abercrombie and Fitch - $1 and $0.50 box

The best time for a bearish trader to lock in profits is at a level of support. I'd at least be looking to lock in 1/2 position gain at this point. Traders that want to give the stock a little more room can do so as there are some stocks in the group with similar technicals that are breaking their bullish support trends. I've haven't had a lot of bullish things to say for shares of American Eagle Outfitters (NASDAQ:AEOS) lately either.

American Eagle Outfitters - $1 box

On Friday, I was pretty active in the "hot list" on OptionInvestor.com regarding shares of American Eagle Outfitters (AEOS) breakdown. Break of upward trend and losing a base that the stock had been trying to hold. Both ANF and AEOS are considered "high-end retailers" and relatively easy to tie the group action together here.

Jeff Bailey
Senior Market Technician

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