Teen Retailers Playing Crack the Whip

When I was a teenager we used to get everyone together when it snowed to go sledding down the big hill in the neighbors’ backyard. It was probably a quarter mile run through 6 back yards dropping a couple hundred feet. There were at least 10 of us and we all had the old flexible flyer sleds. The true fun would begin when we would lock our feet into each others sled and create a chain winding down the hill, like cracking a whip. It always started out safe and straight but turned into a whipsaw effect for the tail with kids falling off and occasionally a major mishap (ask my mother about that). The charts of the teen retailers reminded me of those days as they are starting the progression down the hill. The Buckle, $BKE, is leading the way followed by Abercrombie & Fitch, $ANF, Zumiez, $ZUMZ, Aeropostale, $ARO, and with American Eagle Outfitters, $AEO, the tail. Take a look.

Buckle, $BKE

The Buckle, $BKE, leader of the chain has been heading lower since the start of the month. Now through the Simple Moving Averages (SMA), and with a Relative Strength Index (RSI) that failed at 50 and is turning back lower and a Moving Average Convergence Divergence (MACD) indicator crossing negative, it is ready to test the mid November low and the series of support from August and September below that.

Abercrombie & Fitch, $ANF

Abercrombie & Fitch, $ANF, looks to be next with the RSI that did not even get to 50 rolling lower and the MACD fading. It also has all of the SMA’s rolling lower. It failed to reach the gap before reversing. Below there is support at 44.25 and then 41.10 from October last year.

Zumiez, $ZUMZ

Zumiez, $ZUMZ, is close behind and the first to break the flag lower, with a RSI trending lower and a MACD that is fading supporting the downside. A move below the gap up at 27 leads to support near the gap fill lower.

Aeropostale, $ARO

Aeropostale, $ARO is just leaving the top of the hill, but the RSI has turned lower and is approaching eh mid line while the MACD that had turned positive is now crossed negative again. 14.83 is important and then 12.82 to the downside.

American Eagle Outfitters, $AEO

American Eagle Outfitters, $AEO, is still on top of the hill but showing signs of being dragged lower. The RSI has just turned and the MACD is starting to fade. Support is close by at 14.20 and then near the 50/200 SMA Golden Cross at 13.41. This looks like a case of a strong player being dragged lower.

There is a lot of information to be found looking at a sector like this. Which is the strongest for a possible reversal? Can you pair them? Which is best in a down market? The Relative Strength of each. How will you use this information.

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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