Discounts Coming to Discount Apparel Stocks

There are many types of retail department stores from the high end to those that discount what the high end offers. The stocks of this latter group of off price retail apparel stores have been flying lately. But it may be time for them come in for a landing. Take a look at two of them, Ross Stores, $ROST and TJX Companies, $TJX.

Ross Stores, $ROST

Ross Stores, $ROST, has had a monster run higher from August. Nearly a straight line higher. The Simple Moving Averages (SMA) are also running higher, the Relative Strength Index (RSI) has been bullish for quite some time and the Moving Average Convergence Divergence (MACD) indicator has been positive and trending higher. But in the last week the RSI has turned to being overbought and started to fall. The MACD has stopped growing and is fading. Both signs of a change of character. The chart printed a Hanging Man doji Tuesday, a potential reversal, and confirmed that with a lower close Wednesday. Strong support comes in around the 51 area. It has a catalyst as it reports earnings Thursday morning before the open, and I am positioned for it long Put Spreads.

TJX Companies, $TJX

TJX Companies, $TJX, shows the same straight rise since August with a bit of acceleration the last two weeks. But it also is into overbought territory on the RSI with a MACD that is fading. This zoomed in picture also shows how far the price has moved above the 50 day SMA, nearly 10%, after hugging it closely for most of the run higher. The consolidation that is occurring could continue to help work off these excesses, or it could fall. On a break of this flag lower it will be a good short.

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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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