Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.
On July 13, I highlighted AnnTaylor Stores Corp. (NYSE:ANN) as a potential short opportunity based on both the longer-term and shorter-term charts. The stock then proceeded to rally more than anticipated, finding resistance near its 50-day moving average (yellow line).
Depending on how tight you had placed your stops, you might have been stopped out of the trade. But not every trade can work and good risk management dictates that stops must be set at the predetermined levels. That does not mean, however, that should a trade on the same stock around similar levels cannot be tried again.
Such is the case with ANN currently. After stopping out of roughly two-thirds of my original short position, the stock started moving back down toward the $25.50 area, topping out on July 21.
Yesterday, the stock proceeded to slip 3.84%, and with that closed well below the $25.50 area and the 200-day moving average (red line). I added to my small leftover initial short position yesterday before the close and am eyeing a first quick target at $24 and a second target closer to $22. Initial stops I am again setting at $26.50.
The longer-term weekly chart of ANN dating back to the second half of 2008 looks much the same, with the stock still in the longer-term uptrend but looking to put that to a serious test.
