NEW DIRECTIONAL PUT PLAYS

Abercrombie & Fitch - ANF - close 26.58 change -1.49 stop 29.11

Company Description:
Abercrombie & Fitch Co. (A&F) through its subsidiaries, is a specialty retailer that operates stores and direct-to-consumer operations selling casual sportswear apparel and accessories for men, women and kids under the Abercrombie & Fitch, abercrombie kids, and Hollister brands.

Target(s): 33.00, 31.50
Key Support/Resistance Areas: 38.20, 37.25, 32.75, 34.00, 30.50
Time Frame: Several weeks

Comments:
We are back with a consumer name in the retail space. Retailers are weak and ANF looks ready for a drop if the broader market cooperates. This company is one of the more bloated retail names out there and trades at high PE ratio of 26. Technically the stock has broken out of a bear flag that formed in July and August off of the decline from its April highs. ANF is also consolidating below its broken trend line from the 11/08 lows (see dashed line) and volume is picking up which indicates sellers are overwhelming buyers. I suggest we initiate short positions now or on any strength in the stock. We'll use stop of $38.40. Our targets are $33.00 and $31.50.

Suggested Position: Buy October $34.00 PUT, current ask $2.17

Annotated chart:

Entry on August xx
Earnings: 11/11/10 (unconfirmed)
Average Daily Volume: 3.5 million
Listed on August 24, 2010