July 11th, 2012
I don’t see many clear tops these days but Cramer’s pontification this evening about difficult times for luxury goods retailers and manufacturers caused me to take a look at Tiffany’s chart. What we may here is another case of warning of a fire long after the barn has already burned down. What I mean is that TIF offers a textbook case of a head-and-shoulders top that could have been sold 20% higher and probably should have been sold without any question when it gapped below the neckline of that top reversal pattern at the end of May:
TIF is now 40% off its peak a year ago so Cramer should probably have spoken about where the bottom might be rather than taking a whole segment of the show to put together a rationalization for burying a whole group of stocks including COH, PVH, RL and VFC (I was fortunate he pumped TGT since it’s in my Portfolio).
According to some chart reading rules-of-thumb (i.e., neckline is halfway between peak and trough bottom), TIF might be half way to the bottom or around 42. These last ten points could be quick so those who play both sides of the street (short as well as long) should act quickly because the remainder of the trip could be over before you even realize it.