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Abercrombie & Fitch - ANF - cls: 47.18 chg: -1.37 stop: 50.01

Company Description:
The Company operated 352 Abercrombie & Fitch stores, 163 abercrombie stores, 289 Hollister Co. stores and 6 RUEHL stores at the end of fiscal September. (source: company press release or website)

Why We Like It:
Normally we would be looking for bullish entry points in the retailers in the second half of October. That's usually when we see a bottom in the sector as investors begin to put money in the group ahead of the holiday shopping season. Yet this time the retailers are looking vulnerable and ANF could help lead the way lower. Concerns over inflation and the impact of rising gas and energy prices on consumer spending have been dark shadows looming over ANF and we don't see any light at the end of the tunnel at least that's what we see from the action in the stock. The company actually reported a very impressive same-store sales increase of +21% on October 6th. The sales increase pushed the stock over the $50.00 mark but the rally quickly failed. Now the pattern looks like a bear-flag and the recent bounce last week has failed at the $50.00 mark. Today's 2.8% decline made ANF a big under performer against its peers. We're going to suggest shorts here under the $49.00 level and target a decline into the $43.00-42.00 range. We would look for some support near the September low around $44.25.

Picked on October 18 at $47.18
Change since picked: + 0.00
Earnings Date 11/15/05 (unconfirmed)
Average Daily Volume: 2.5 million

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BEA Systems - BEAS - close: 8.25 chg: -0.08 stop: 8.51

Company Description:
BEA Systems, Inc. is a world leader in enterprise infrastructure software, providing standards-based platforms to accelerate the secure flow of information and services. BEA product lines -- WebLogic, Tuxedo, JRockit, and the new AquaLogic(TM) family of Service Infrastructure -- help customers reduce IT complexity and successfully deploy Service-Oriented Architectures to improve business agility and efficiency. (source: company press release or website)

Why We Like It:
Tech stocks have been leading the way lower the last couple of weeks and BEAS is no exception with a new three-month low last week. The oversold bounce in BEAS has stalled under its simple 10-dma and its simple 200-dma. Given the overall (bearish) market environment right now we think BEAS may still hit another round of new relative lows before it reports earnings in mid-November. We are suggesting shorts under the $8.40 level. Our target is going to be the $7.75-7.50 range. The biggest risk here is that BEAS is still a takeover target by the likes of Oracle (ORCL) and Microsoft (MSFT) although it does seem like the M&A activity in the enterprise software sector has cooled a bit.

Picked on October 18 at $ 8.25
Change since picked: + 0.00
Earnings Date 11/11/05 (unconfirmed)
Average Daily Volume: 5.0 million
 

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