The Children's Place Got Spanked

in investing •  17 days ago


The Children's Place, Inc. operates as a children's specialty apparel retailer and sells apparel, accessories, footwear, and other items for children; and designs, contracts to manufacture, and sells merchandise under the proprietary The Children's Place, Place, and Baby Place brand names.

On Monday, Children’s Place announced earnings and got spanked. They reported fourth-quarter earnings and sales, and provided full-year guidance that missed expectations.

The miss was directly due to the Gymboree bankruptcy.  In January Gymboree Group Inc. which also sells children apparel filed for bankruptcy protection for the second time in less than two years and plans to shut all it 380 Gymboree stores and 154 outlets and 253 Crazy 8 stores and 11 outlets and started its going-out-of-business sales immediately.

“We have never experienced a total liquidation of a direct competitor of the size and proximity of Gymboree,” said Chief Executive Jane Elfers. “We overlap with nearly 70% of the approximately 800 Gymboree and Crazy 8 stores, all of which will complete their liquidation events and close within the next 60 days.

Source

But Children’s Place spanking could have been seen from a room away.  Can you see it?

What about now?

A fellow trader introduced me to “M” and “W” patterns months ago.  And since then, they have demonstrated their validity on many occasions.

A “M” pattern aka double top is a reversals pattern that signals a trend has come to an end.   The cool thing is these patterns work on 2 min charts and/or weekly charts.  Take Children’s Place on the weekly chart for example. Once price broke the pivot low, it was over.

The chart suggests if price can make it back to the daily supply at $130 short the stock.  However, I’m not sure it will get back to those levels before it declines further.

The chart suggests, price can decline to as low as the weekly demand at $62…as a first target.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.


Published by Rolland Thomas
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Retail will be scary the next couple of weeks as numbers continue to come out and winners continue to make space against the losers. Interesting to see how we are almost always at extremes with retailers.

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I'm personally looking to short the names that gap higher.