Abercrombie & Fitch - ANF - close: 33.89 change: -1.98

Stop Loss: 36.25
Target(s): 30.25
Current Gain/Loss: unopened
Time Frame: 3 to 6 weeks
New Positions: Yes, see below

Company Description

Why We Like It:
The oversold bounce in the RLX retail index appears to have just reversed. ANF could help lead the group lower. The stock was hammered in the middle of May when ANF reported earnings, missed the revenue number and management lowered their same-store sales guidance.

The stock has spent the last few days consolidating near $35.00 but that changed today with a -5.5% drop to new 52-week lows. Now ANF doesn't publish its same-store sales figures each month but several retailers will announce their May same-store sales figures tomorrow. That could cause some volatility in the retail stocks. Yet ANF's trend is down.

I am suggesting bearish positions at the open tomorrow and we'll use a stop loss at $36.25, just above the 10-dma. Our target is $30.25 since the $30.00 level is round-number support.

Suggested Position: short ANF stock @ (the open)

- or -

buy the Jul $30 PUT (ANF1221S30) current ask $1.05

Annotated chart:

Entry on May xx at $ xx.xx
Earnings Date 08/15/12 (unconfirmed)
Average Daily Volume = 3.9 million
Listed on May 30, 2011