Foot Locker's Achilles Heel

My scans of the stock charts this week are showing a nice short sell on a famous tennis shoe retailer. It sold off about 5% on Friday after the unemployment rate hit 5.5%, oil spiked back up to $11.00 to end the day at about $138 a barrel, and an analyst at research firm Sterne Agee posted a hold rating on this stock giving it a $12.00 price target.

Short Sell: Foot Locker (FL)

First, my analysis to sell or buy is mostly from the technical perspective as I'm looking for low risk high reward trade setups of at least 3:1 reward risk. Foot Locker is showing about a 3.5:1 reward risk ratio. Now reward risk ratios are subjective also, and my analysis of this could be wrong. Simply put, this business of investing and trading is more an art than a science. . . predicting the future I mean. I do look at the forward fundamentals of the general market, and the companies in considering my buy and sell positions. Since I use stop-loss, and stick to my stop-loss rules, whether I'm right or wrong, I've got a long term winning system. So when the market proves me wrong, just like the market proves anyone wrong, I take the small loss and move on to the next investing and trading idea. I hope you are using stop-loss too. Live to invest and trade another day right? Right!

FL Short Sell Trade Setup

• Sell at current price of $13.74 or higher up to 15.08.
• Stop-Loss 8% or any amount you can handle losing.
• Take Profit Areas.
• Short Term $12.40

5/22/08 saw a low of $11.84, and 5/23/08 saw a gap up opening at $12.81 on bigger than normal volume with a close at $13.54. I’m betting these fresh longs will be tested along with a price of $12 or so anytime now.