You would normally think that rising gasoline prices would be bearish for retail stocks. Yet many of the retailers have been very resistant. FOSL is trading near its highs and looks poised to breakout again.
In addition to tonight's new candidate, check out these potential candidates:
CTXS might be a buy on a move over $77.00
ROST is another retailer and might be a trade over $73.25
VMW has earnings coming up next week but if we see a dip back toward $82 or $80 after its earnings report it could be an entry point.
CERN actually looks like a bullish candidate right here. Aggressive traders could buy the bounce with a tight stop and target a move to $116 again.
NEW DIRECTIONAL CALL PLAYS
Fossil Inc. - FOSL - close: 94.67 change: +2.16
Stop Loss: 91.95
Target(s): 99.75, 104.75
Current Option Gain/Loss: Unopened
Time Frame: 4 to 8 weeks
New Positions: Yes, see trigger
Why We Like It:
Many of the retail stocks have been extremely resistant to profit taking in the face of rising gasoline prices. One of the most resilient has been FOSL.
FOSL might not be considered a traditional retailer but the company does own its own stores. Plus FOSL also sells its goods through catalogs, department stores, and other specialty stores so the general idea still applies. While the market's major averages were correcting lower this past few days, FOSL has been consolidating sideways. Traders have been buying dips to support near $92.00 but there is resistance in the $95.00-95.50 zone.
I do consider this an aggressive trade since we're looking at bullish positions with the market's major indices still acting vulnerable to new declines. However, FOSL has been able to ignore the market's weakness thus far. I am suggesting we open small bullish positions with a trigger at $95.60. If triggered our first target is $99.75. The $100.00 mark is probably round-number, psychological resistance. We'll set a secondary target at $104.75 but that might be wishful thinking.
Trigger @ 95.60 (small positions only)
- Suggested Positions -
Buy the May $100 call (FOSL1121E100) current ask $2.65
- or -
Buy the June $100 call (FOSL1118F100) current ask $3.70
Entry on April xxth at $ xx.xx
Earnings Date 05/10/11 (unconfirmed)
Average Daily Volume = 858 thousand
Listed on April 13th, 2011