Ann Taylor: Could Investors Have Avoided the Pain?

Mar. 8.09 | About: Ann, Inc. (ANN)

Sometimes charts are more than helpful. Sometimes they are can avoid a devastating loss. And, sometimes they just make you wonder, whether the market's on the up and up. Ann Taylor (NYSE:ANN) is a case in point.

Let's look at Friday's action. ANN reported a mind boggling $6.66 a share loss. Factoring out one time events, ANN lost $1.03 a share, far worse than consensus estimates of $0.55. The stock cratered 38% that day to $3.41. This stock had been on a roll these past six weeks, climbing from $4.51 on January 23 to $6.56 on February 27.

Could this have been foreseen? Looking at the chart, the stock, after a spectacular rise, had been treading water for eleven trading days. The day before earnings were announced the stock saw unusual activity. ANN dropped from $6.19 to close the day before earnings were announced at $5.54 on high volume. That chart break down tipped off savvy investors to the impending disaster.
The fall off on the day before earnings were reported raises serious questions. Were those selling on March 5 privy to the next day's earnings' report? Had they, in fact, been tipped off? Or, were they simply taking profits?
Disclosure: no positions