How We Pegged DKS & ANF: And Why They Are Not Done Losing

Dick's Sporting Goods (DKS – NYSE); Abercrombie & Fitch (ANF – NYSE)

Thursday, August 22, 2013

The crows are finally coming home to roost!

Back on August 16th, we predicted that Dick’s Sporting Goods (DKS – NYSE) would strike out on earnings day, and warned that “DKS is trying to establish support at the 38.2% retracement marker at $50.27. If this line breaks (and frankly we think it will), DKS ought to drop to $47.87 almost immediately.”

Bottarelli Research Tip #1: Turns out we were right – and then some! Because DKS broke right through support at $47.87, and looks to be headed toward the 100$ retracement marker at $43.97.

But we have more breaking news today!

Back on August 6th, we warned that: “Abercrombie & Fitch (ANF – NYSE) technicals indicated a drop to at least $44.68, with a strong probability of a follow-on move to $38.33. What’s more, that move would complete a Head & Shoulders Sell Signal that would sentence ANF to a plunge to $33.17.”

Bottarelli Research Tip #2: Today, ANF reported earnings of $0.16 per share, down 20% from last year, and far below expectations of $0.31. And forward earnings guidance was less than half expectations! ANF has also plunged through support on the news and could easily drop as low as $33.17, barring some freak “cult” buying.

Bottarelli Research LEAPS readers have just been asked to sell their ANF puts for gains exceeding 64%. But they are holding on to one last retail put against a department store chain with the weakest fall marketing plan we have ever seen! (It involves paperclips – seriously!) You can still buy these puts today. But don’t wait too long – the retail sector is unwinding quickly, and we are planning on collecting another 50% winner here soon!

ADAM LASS GETS VINDICATED IN A MAJOR WAY: As you probably know, Adam has been bearish on teen retailer Abercrombie & Fitch (ANF – NYSE) for months. Whether it was their lagging brand, soft sales, or their pompous and chauvinistic CEO, Adam was begging anyone who would listen to short this troubled retailer.

This morning, Adam was laughing all the way to the bank.

You see, ANF reported earnings of $0.16 per share, which was down 20% from last year, and well off the expectation of $0.31 per share. Forward earnings guidance was just as lousy. Abercrombie expects Q3 earnings per share of $0.40 to $0.45, which was well below the $1.06 EPS predicted by analysts. Brutal!That’s why ANF is reacting with a crushing downside move — as noted above.

But more importantly, Bottarelli Research LEAPS members are thrilled that they listened to Adam and held their ANF puts. Here are some of the comments we received earlier this morning:

LOVIN’ THE LEAPS: “Very nice trade on ANF. Entered at $5.70. Exited on your instructions this morn at $9.05. 58% profits are good. Paid for more than a year’s worth of your service. Lovin’ the LEAPS and the Options service. Profitable on the year. Thank you again.” — Member Ron L.

KEEP PUTTING THE REST TO SHAME: “I have been subscribing for 2 years. My view is, give me picks and shut up. You guys actually state what you think and why. This is huge. You guys have brains, and that will lead to respect and money. Keep putting the rest to shame.” - Member Rick S.

This ANF winner is proof that LEAPS can make you substantial profits without sitting at your computer every second of the day to trade. If you’d like to get one alert per week, and make gains of 64% like we just made on ANF, then the time to take the plunge and join us is now.

Click here for your LEAPS invitation letter. We look forward to welcoming you into our elite trading group today!

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