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The Oxen Report: I Just Can't Get Enough of You...Retail

|Includes: ANF, Aeropostale, Inc. (ARO), CHS, EUO

This is a guest post by Phil's Stock World Oxen Report writer David Ristau. Check out his Seeking Alpha page and become a follower or visit him at Phil's Stock World.

Happy Tuesday to all! It is looking to be a nice day in the markets today. Euro is coming back! That is good news for us on our short sale of Proshares Ultrashort Euro ETF (NYSEARCA:EUO) that we got involved with yesterday and have continued to hold. We got into EUO at 24.65, and we are looking to exit at 24.15 - 23.90. Additionally, yesterday, in my Oxen Alert - Long Play of the Week, we got positioned into Aeropostale Inc. at 28.00. We are looking for 4-6% gains. The stock closed yesterday at 28.56, so we are halfway there. Those are the two open positions we have, and here is another one for you for today…

Buy Pick of the Day: Chico’s FAS Inc. (NYSE:CHS)

Analysis: If you haven’t noticed, I do like my retail stocks. Today, I think I have another solid opportunity for us in the retail sector that should be a lucrative play. This morning, the market got some great earnings from Abercrombie and Fitch (NYSE:ANF) and luxury retailer Saks Inc. (NYSE:SKS). Saks led the way with an EPS of 0.12 vs. the expected 0.05, a surprise of 140%. The stock has kicked up over 6% in pre-market, and it, as well as ANF, should help to bring the retail sector up today. Additionally, the rest of the market is also looking very attractive after some good news about the Euro, which is on the rise and the housing market. The market saw a rise in housing starts in the month of April better than March and is a small sign that things are getting slowly better.

With that said, futures have been rising all morning. So, a lot of stocks are going to be opening over 2-3% premium at the bell. We want to find a stock that has potential for growth all day and is not just going to pop and then neutralize. That is why I like Chico’s. The company makes clothing designed for middle-aged to older women. It is in the same vein as Coldwater Creek, Ann Taylor, and Talbot’s. This specialty retailer should have a good day because of all the bullish news swirling around it. Additionally, the company reports its earnings tomorrow morning. This added buzz should help to allow CHS to continue to grow all morning and not just be a quick pop. 

The company should be getting some excitement as it has two great quarters in a row as well with 87.5% and 100% surprises. The company, though, has sold off into the announcement rather than get bought up, which only gives me more reason to like this stock. Those types of beats should help to give more fuel to Chico’s as well as the bullish day and other solid retailers. 

Technically, CHS has, as was said, been sold off recently. In the past two weeks, the stock has lost 5%. In the past three, it has lost over 10%. The company has been on the decline. It is near its lower bollinger band, which means it has lots of upside to move towards the upper band. It is oversold on stochastics, and it is undervalued on RSI. These are all the more reasons to believe this one has some great potential.

Get in early and watch this one rise!

Entry: We are looking to enter CHS at the opening of the market at 14.50 - 14.60

Exit: We are looking for a 2-3% gain before we exit.

Stop Loss: 3% on bottom.


Good Investing,

David Ristau

Disclosure: none