This may sound very basic, but it plays very much into the "smokestacks smoking" theory of economic indicators. Yesterday, I was chatting with my mom and talking about her day. She said she went to Kohls (NYSE:KSS) to do some holiday shopping as this weekends newspaper had some good bargains that she wanted to get in on. She said the place was a zoo and the checkout lines were long. She was exhausted.
Well... I could have "cared less" about the shopping experience and I immediately pulled up a chart to see if I could make a buck or two on her research and perhaps get here that toe-ring I know she wants. Suffice it to say, the MARKET has some hint of robust holiday sales at Kohls (KS), so I'm going to look for a pullback (should we get some type of broader market weakness, there's hope) to the $61 level.
Kohls Corp. Chart -
I've tried to "envision" a trade setup in shares of Kohls (KSS) above. Subscribers should not assume that the 7 bars pullback will necessarily (if at all) be saying the stock will pull back to $61 in the next seven days, but it is how I'd like to see the stock trade if I'm going to buy the stock at $61 (based on Mom's research and the technicals). Holiday shopping numbers should start hitting the news wires in late December early January. If they're strong at Kohls, then I think the stock may be running into those sales numbers and look to sell than strength at $71.82. A lot has to happen between then and now, but something to look for.
It seems like "simple logic" to make an observation of the numbers of shoppers in a department store, but it does give some interesting insight. On July 10th in the 10:30 EST Update, OptionInvestor.com profiled Abercrombie & Fitch (NYSE:ANF) as a short at $41 as "Mall Rats Buying Less Cheese." We also identified a looming short in American Eagle Outfitter (NASDAQ:AEOS) on a break at $34. What had us looking at those two charts back then was our lunchtime stroll around the mall after a bite. You could have heard a pin drop in Abercrombie and American Eagles stores. Another store that was very empty at that time was The Gap (NYSE:GPS).
Correction to 11:00 Intraday Updates on OI and IS
I was scrambling to finish today's 11:00 Update and mistakenly type the WRONG option symbols for the previously mentioned Continental Airlines (NYSE:CAL) straddle, which had been highlighted on November 9th in the 03:00 Update. The correct symbols are now posted on the web site, but the 11:00 e-mails were not caught in time.
The correct symbols for that Continental Airlines "strangle" were the June 20 calls (CALFD) and the June 15 Puts (CALRC). I accidentally typed the symbols for the Cendant "straddle" from November 14th 03:00 Update.
Here's a look at past profiled straddles and strangles are doing that we've mentioned in our intra-day commentary.
I've highlighted in red the Continental Airlines (CAL) strangle. You can see where I got the wrong symbols from and used the Cendant (CD) straddle option symbols.
Late Wednesday, just before the close of trading, I also highlighted a "straddle" trade in Medtronic (NYSE:MDT) just ahead of their earnings report. I've put "**" by the call portion of that trade to signify that 2 contracts may have been bought by a trader. This may have been done so that the trader invested $200 (excluding commission) to balance out what 1 put contract in the puts of $175 would have cost. I view straddles/strangles as a 50/50 type of weighting in the call and put. Due to the price disparity based on where the stock was trading at the time (near $44) the $45 puts were $0.75 per contract more expensive. An equal purchase of 1 call and 1 put would have had the trader more "underweight" in the trade. By buying 1 additional call, the trade was closer to a 50/50 weighting.