NEW BEARISH Plays

The TJX Companies, Inc. - TJX - close: 54.66 change: -0.49

Stop Loss: 57.10
Target(s): To Be Determined
Current Gain/Loss: unopened

Entry on May -- at $--.--
Listed on May 27, 2014
Time Frame: 8 to 12 weeks
Average Daily Volume = 4.5 million
New Positions: Yes, see below

Company Description

Why We Like It:
TJX is in the services sector. The company runs off-price apparel and home fashion retail outlets with brand names under T.J.Maxx, Marshalls, HomeGoods, and more. TJX has over 1,000 locations.

Retail has had a tough time this year. Disappointing Q4 Christmas shopping season results were then followed by one of the worst winter seasons in years. TJX has not been immune to the issue. The company reported Q4 earnings results and missed estimates and then lowered guidance for Q1 and full year 2015. They did it again just a few days ago when they reported their Q1 results. TJX missed estimates on both the top and bottom line and then management lowered their guidance for 2015 again.

Shares collapsed last week following the new earnings earning and the oversold bounce has already failed. TJX has also broken down through some long-term bullish trend lines (see weekly chart below).

There are a few analysts saying the sell-off is overdone and traders should buy this weakness but no one seems to be listening. There could be more analysts coming out and trying to call a bottom on TJX, which might spark some short-term rallies but the path of least resistance is down.

Tonight we are suggesting new bearish positions immediately with a stop loss at $57.10. I'm not setting a bearish target yet but the $50.00 level is potential round-number support. Currently the point & figure chart is bearish and forecasting at $45 target.

*Launch positions at the opening bell*

Suggested Position: short TJX stock @ (the open)

- (or for more adventurous traders, try this option) -

Buy the Oct $52.50 PUT (TJX141018P52.50) current ask $1.70

Option Format: symbol-year-month-day-call-strike

Annotated chart:

Weekly chart: