A Couple on the Short Side

This morning I outlined a few longs I thought might be attractive, so it is only appropriate to look at a couple on the short side. I'm starting with Chico's FAS (CHS). The last time I tossed this one out on the short watch list, retail sales came out on much of the sector and were well ahead of expectations, sending just about everyone in the group higher. CHS followed along never triggering my entry. Six weeks later, CHS has not only given up all those gains, but its price is slightly lower than where I first looked at it on the short side. CHS has just about filled the gap left on the daily chart, so I expect support to come in around $17; however, that only defines an entry rather than preventing one. I believe this could be a short on a close below $17 or even a bounce to $17.50 that then turns lower. The relative strength indicator is just now breaking down and stochastics could remain oversold for a few more weeks.

Chico's FAS (CHS) Source: StockCharts.com View Chart » View in New Window »

I have to expand out to the weekly chart (below) to obtain my downside targets of $15.80 and $15. CHS is not forming a megaphone pattern, which is bearish, after falling out of a very short-term channel. The TRIX is clearly in a bearish move lower while the RSI bearish channel confirms this move lower. I haven't looked for a pair to go along with CHS, but given how this group can move together in very short time frames, it may not be a bad approach....164 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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