Friday, March 28, 2008

Going Long ANF - Range-Sound Stock

I may be a session or two premature, but I went long Abercrombie (ANF) today as it's now around the low end of it's trading range.

Below is an 11-Month chart that shows the cycles:

The three deepest, major bottoms formed around $68, $70, and $71, but as you can see, minor bottoms have been higher. I may eat a couple dollars of downside if the markets aren't great, but if there's an afternoon rebound today or if we open up Monday, I bet this is where ANF puts in its current low.

With this trade, (if I'm correct about the movement direction), it's usually safe to hold out for $79 or so. It usually tops out a little above $80, but there's a risk of missing the top and having to hold for longer.

The reason I like this trade is that it's pretty predictable, and if something unforeseeable does happen, I'm ok with holding ANF stock for a while.

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