June 24th, 2007

Industry Groups: Apparel/Shoe Mfrs (KCP, SKX,TBL, KSWS)

Anyone who’s been a reader of my previous postings will know that I repeatedly say that stocks within an industry group usually move together. But I’ve found an exception in the Apparel, Shoe and Related Manufacturing IBD Industry Group, a group that has moved up 94 positions in rank over the past 2 months:

The 18 stocks in the group actually falling into three groups as far as stock performance since the beginning of the year is concerned. While the S&P500 has increased a little over 6% this year (however, 2 of these are no longer traded, SRR and WLC), six have increased over 20%, six have remained relatively unchanged, and six have declined by 8% or more:

Scrolling through the stock charts, it’s clear that the higher ranking results from the outstanding moves by the top four stocks. But are there any gems in the rough among the others?

I think the following present pictures that are interesting and worth monitoring for breakout buy opportunities:

  • Kenneth Cole (KCP) has been moving in a downward channel for 3 1/2 years, the top of which happens to also represent a resistance trendline going all the way back to 2000. It might be stretching it to also point out the upward-sloping support trendline going back to 1999 which, combined with the resistant trendline shows a long-term, wide pennant formation. Which way the stock might break is unclear right now so we’d have to wait until significant volume materializes either way.

  • Sketchers (SKX) is one of several hundred stocks that are hovering at or near its all-time hight established at the height of the bubble in 2001. Once that’s cleared, carried along with further upward movement in the overall market, SKX could be cleared to make significant new highs.

  • Timberland (TBL) is also meeting resistance at its all-time high established in 2000. Its chart looks almost identical to SKX and should, I’d expect, move similar to it unless either of them have unusual corporate events.

  • K-Swiss (KSWS) has a chart that looks slightly different than Sketchers and Timberland. It, too, is bumping against its all-time high but, this time it’s a high that was made more recently in 2005. As a strong market moves continues to move to new high ground, it will carry stocks like KSWS with it.