Retailer Guess Inc. (GES) looks good for a short here.
The firm reported poor quarterly results last night, missing expectations for both earnings per share and revenues. GES did maintain its dividend -- which does create an attractive yield -- but maybe management had to. Results were damaged by poor comparable-store sales and merchandise discounting, and the stock is off more than 10% this morning after being even lower overnight.
With Guess Inc.'s price now well below all of its simple moving averages, one may turn to using an Andrew's Pitchfork model, beginning with the stock's March highs and running through the present time. It's clear to see that GES has used the central trend line as support over a rough 90-day period. But the stock has now briskly returned to trend after breaking to the upside in the euphoric market response to the U.S. election.
GES appears to have wrestled with its 2016 lows from late November to early October as new support. This bounce might provide a better out, or a better short. The model suggests that a break and hold below $13.25 would allow the stock to fall as far as the $11.75-to-$12 range. On any sort of algorithm-driven snapback, absolute resistance would seem to appear below the 50-day simple moving average, which is $14.57.
The Trade: Short GES
Last Sale: $13.77
Aggressive Target: $11.85 (13.9% gain on your short)
Modest Target: $12.50 (9.2% gain on your short)
Panic Point: $14.50
Time period: The time frame for this trade is less than one month. Be flat by year's end.