WOO trade ideas
$FL BUY RATING AND $73 PRICE TARGET 30% UPSIDEJust as NYSE:UAA and NYSE:NKE have been treated to upgrades, it was NYSE:FL turn today. It really comes as no surprise as consumer sentiment had greatly improved in the first quarter in comparison to the 4th quarter of 2018. B. Riley raised price target for Foot Locker, Inc. from $62 to $73. Foot Locker shares closed at $55.47 on Thursday. We will not be jumping in at this level until a few resistance levels are broken, $60 looks like a appealing long entry point.
Average price target $70
Average rating Overweight
COMPANY PROFILE
Foot Locker, Inc. engages in the retail of athletic shoes and apparel. It operates through the Athletic Stores and Direct-to-Customers segments. The Athletic Stores segment sells athletic footwear and apparel under the Foot Locker, Lady Foot Locker, SIX:02, Kids Foot Locker, Champs Sports, Footaction, Runners Point, and Sidestep brands. The Direct-to-Customers segment includes Footlocker.com, Inc., Eastbay, Inc., and international electronic commerce businesses.
$FL Foot Locker is Nike's best friendIf you like Nike, YOU SHOULD LOVE FOOT LOCKER, the tend to move in a very similar pattern. FL sells at a very reasonable P/E 13 while NKE has a 33P/E, we have every confidence that we will see the price move to fill the gap at $70 before continuing to a all time high of $78. Consumer confidence and spending statistics have recovered from a poor 4th quarter of 2019. Staying long unless we break down below $60 where we will reassess our position.
Bullish Trade Example: Foot Locker Notice the up arrows around the Blue indicator lines. These indicator lines show good levels to buy
The longer the holding period, the bigger the gains (usually). Trade Example: Foot Locker – FL
It is very easy to read price action if you have a reference point. These support/resistance lines are there to help you read where the buyers and sellers are likely to make a stand.
MasterChartsTrading Price Action Indicators show good price levels to enter or exit at trade.
The Blue indicator line serves as a Bullish Trend setter.
If your instrument closes above the Blue line, we think about going Long (buying).
For commodities and Forex, when your trading instrument closes below the Red line, we think about Shorting (selling).
For Stocks, I prefer to use the Yellow line as my Bearish Trend setter (on Daily charts ).
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Foot Locker: How to Trade A Stock That Gaps and CrapsFoot Locker: How to Trade A Stock That Gaps and Craps
March 4, 2019 by Dr. Duru
Foot Locker (FL) reported earnings before the market opened on March 1, 2019. The initial reaction to the news was extremely positive: FL gapped up 14.0%. Sellers took over from there and pushed the stock down to a close with a 6.0% gain. The stock still managed to close above its upper Bollinger Band (BB), so technically it remains extended.
{Foot Locker (FL) printed a major post-earnings breakout to a 21-month high. Sellers faded the stock off its intraday high for a 6.0% gain at the close.}
This gap and crap (or trap) was dramatic. However, since the stock still closed the day with a substantial gain, this gap and crap is not a topping pattern in of itself. The stock still has a “decent” chance to recover its post-earnings strength after what is called a “calm after the storm” pattern. In the case of FL, the storm is the post-earnings gap up. The calm will be a relative deceleration in the trading action where volume and the daily price range contracts for a short time period. Sometimes this period looks like a brief consolidation where the stock drifts. Ideally, the stock will reverse the entire post-earnings gap to provide a definitive test for traders (buyers in the case of FL). Swingtradebot describes a calm this way:
In the days after a “storm”, the stock must make an NR7, a narrow range bar (NRB) (day’s range less than half the stock’s average true range) or have a real body (distance between the open and the close) less than half the stock’s average true range (which might catch reversal candlesticks like doji, hammers or shooting stars).
The buying opportunity occurs at any given point during the calm – a 1 to 3 day wait seems typical. For FL, the clear stop-loss would be at a new post-earnings low. At such a point, trading with the on-going downward momentum makes sense.
I will probably use options to trade FL in the immediate post-earnings period. On the long side, I might start with a calendar call spread at the $65 strike for a 2-week trade. For longer time periods, I would go for the $70 strike. I set the strike at a point where I think the stock can reach but not surpass before the short side of the calendar spread expires. This options configuration also assumes the upward momentum will continue apace after the short side expires. If I am buying options several days into the calm, I would go for straight call options under the assumption that the resumption of upward momentum is imminent and will be strong.
To the downside, I like a put spread with the bottom of the spread set around $54 where the 50 and 200-day moving averages (DMAs) are converging to provide support.
FL is a heavily shorted stock with 9.8% of its float sold short as of February 14th (per Yahoo Finance). I am guessing that short-covering helped to exaggerate the move higher after bears saw the good headlines on earnings like “Fourth Quarter Comparable Store Sales Increased 9.7%” and “A Record Total Annual Sales of $7.9 Billion.” Guidance was also strong: “…we can continue to elevate our financial performance by generating a mid-single digit comparable sales gain and another double-digit percentage increase in earnings per share.” Moreover, the company continues to express great confidence in its business by returning a lot of cash to shareholders. From the transcript (emphasis mine):
“During the quarter, we repurchased a total of 1.2 million shares for approximately $62 million, bringing our full year total to 7.8 million shares at a cost of $375 million. We also returned $158 million of cash to our shareholders through our quarterly dividend in 2018, which brought our total return to shareholders for the year to $533 million.
As we announced in February, our board increased our quarterly dividend payout rate to $0.38 per share and authorized a new 3-year $1.2 billion share repurchase program. “
If a calm unfolds after this storm, I am guessing it will come as a result of the end of profit-taking from the over-extended condition at least partly created by shorts scrambling to cover.
{Foot Locker (FL) has trended generally upward since a major bottom in November, 2017. The stock is in its final push to recover losses that started with earnings in May, 2017.}
Full disclosure: no positions
$FL Foot Locker Holding Support - $12M Bullish Options Bet$FL Foot Locker has tagged and held the uptrend line several times in the last month while forming into a rough pennant pattern. We could remain in this pattern up into earnings in mid-November. I'm expecting an eventual breakout to the upside with a medium term target of $59 and longer term target of $68 by January.
Adding to the bullish sentiment, we saw about 5k deep in-the-money Jan'19 call options traded today for a total premium of about $12.5M - a very bullish bet for a stock which has seen some very volatile post-earnings movements in the last year.
Note: Informational analysis, not investment advice.
FL Rising Wedge 3rd day playFL gapped down 10% despite beating earnings into a Daily S level of 46.60. We bounced back to a R of 49 i.imgur.com . Ive got a plan for two scenarios to both long and short depending what we do here. 1st scenario is we fake breakdown / gap out lower of the wedge and find S and trend back to the top trendline or break further for a test of 200sma. This would further the strength of the stock and re adjust price since it beat earnings and has a reason to move higher. 2nd scenario we do break down / gap and stay weak at lower trendline and continue the weakness in retail. Profit target 47.15 and 46.60. Other stocks in retail like HIBB, GPS, M will influence the direction here and if SPY falls back we could see moves in either direction.
FOOT LOCKER INCShares of Foot Locker -9.17% were down 12 percent on Friday, the stock's worst day in a year, after the company posted weaker-than-expected sales for the last quarter.
Foot Locker's same-store sales for the second quarter increased 0.5 percent versus the 0.7 percent increase expected according to the consensus estimate from FactSet.
Those sales are not expected to get much better this quarter. "For the third quarter, we still expect comparable sales to be up low single-digits with Q4 strengthening further within that low single-digit range," the company's CFO 0.44% , Lauren Peters, said on a conference call.
Foot Locker -9.17% earned 75 cents per share for the quarter, 5 cents better than the consensus analyst estimate from Thomson Reuters 0.14% .
The stock's poor performance on Friday also weighed on Dick's Sporting Goods, which was down 7 percent on Friday, that company's worst day since October 2017.
FOOT LOCKER INCShares of Foot Locker were down 12 percent on Friday, the stock's worst day in a year, after the company posted weaker-than-expected sales for the last quarter.
Foot Locker's same-store sales for the second quarter increased 0.5 percent versus the 0.7 percent increase expected according to the consensus estimate from FactSet.
Those sales are not expected to get much better this quarter. "For the third quarter, we still expect comparable sales to be up low single-digits with Q4 strengthening further within that low single-digit range," the company's CFO, Lauren Peters, said on a conference call.
Foot Locker earned 75 cents per share for the quarter, 5 cents better than the consensus analyst estimate from Thomson Reuters.
The stock's poor performance on Friday also weighed on Dick's Sporting Goods, which was down 7 percent on Friday, that company's worst day since October 2017.
Foot Locker Set To Take Large Strides Over Next 3-4 MonthsFoot Locker is setting up to fly high over the next 3-4 months before reaching its next top. This top coincides with my projected market top during the October/November timeframe this year. Based on comparative trend analysis and derivative analytics, Foot Locker should reach its next top between August 9 and November 20 of 2018. The top should occur between 62.12 and 68.84. The minimum move to 62.12 from today's close of 51.92 would generate 19.64%. I am expecting the top to occur in early to mid October around 64.41.
Unlike some of the other stocks I am following, The 2019 pullback for Foot Locker should not be as drastic as the rest of the market.
Short FL into Fibonacci resistanceThis daily chart of FL shows a sharp move off the high followed by a retracement back into Fibonacci resistance. I am counting the rally as an ABC correction, nearing completion right at the 61.8% retracement level. Initiating a short position at 58.90 with a profit target below 40. A move above 70 invalidates the setup.
