I’m Itching To Short Macy’s Again
Back in 2017 I shorted Macy’s through leap put options, than turned those leap options into calendar spreads and rode the price down from the mid 30s down to just below $20.
Options were originally created with expiry cycles of 3, 6, and 9 months, with no option term lasting more than a year. LEAPS (Long Term Equity Anticipation Security) were introduced in 1990 and are longer term options on stocks and indices. Buying longer term options cost more because of the time value, meaning they give you more time to be correct and the time decay is much slower relative to the 3, 6, and 9 months options.
It was part of my Retailocalypse theme in 2017. But then the sentiment got so low, that the Smart Money rotated capital into retail, lifting the entire space out of the basement. Macy’s has more than doubled off the lows. Value investors will say Macy’s has more room to grow because it’s trading at 10 times earnings whereas department stores from a historical standpoint trade at 13 times earnings. Traders who believe in Fibonacci retracements will agree with the value investors because price hasn’t retraced 50% from high to low yet.
Fibonacci retracements is used to identify potential support and resistance levels. Common Fibonacci retracement levels include: 23.6%, 38.2%, 50%, 61.8%, 78.8% and 100%. There are a lot of traders out there that use the Fibonacci retracements in their trading strategies, so there’s a good chance that there are a ton of orders at those price levels.
However, I’m a supply and demand trader and I’m just trying to find the footprints of the Smart Money on the charts. And when I look at Macy’s I’m itching to buy some leap put options once and if price gets to the monthly supply levels of $45, $51 and/or $58.
Please note, price was at the level at $44 before and filled sell orders in 11/16, so I think there are very little sell orders remaining and looking for price to head up to $51.
Confirmation to short Macy's will be once the monthly candle closes below the trendline.
NOTE: Macy’s announces their quarterly earnings this Weds.
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.
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by rollandthomas
Well I wouldn’t look for a long in this setup so short is probably the way to go. But yeah wait until the trend reverses
Agree.
I'd say your retail apocalypse is still on, the can just got kicked further down the road.
Agree, need to wait until the sentiment turns negative.
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Great find.
Thanks, its selling off now, although they beat the estimates.