Today’s Big Stock: Guess?, Inc. (NYSE: GES)

Guess?, Inc. designs, markets, distributes and licenses apparel and accessories for men, women and children. The company’s apparel is marketed under numerous trademarks including GUESS, GUESS?, GUESS U.S.A., GUESS Jeans, GUESS? and Triangle Design, MARCIANO, Question Mark and Triangle Design, a stylized G and a stylized M, GUESS Kids, Baby GUESS, YES, G by GUESS, GUESS by MARCIANO and Gc. The lines include full collections of clothing, including jeans, pants, overalls, skirts, dresses, shorts, blouses, shirts, jackets, knitwear and intimate apparel. It also grant licenses to manufacture and distribute a range of products that complement its apparel lines, including eyewear, watches, handbags, footwear, kids’ and infants’ apparel, leather apparel, swimwear, fragrance, jewelry and other fashion accessories. The company operates in five segments: North American retail, Europe, Asia, North American wholesale and licensing.

Please take a look at the 1-year chart of GES (Guess?, Inc.) below with my added notations:

As with most stocks, GES had a rough go of it back in July, August and September. While running mostly sideways from August through January, GES created a strong resistance at $35 (navy). Last week, the stock finally broke through that resistance level. Although that is certainly a good sign for the stock, one would have liked to have seen the stock break out on higher volume. This volume deficiency definitely doesn’t mean the stock can’t go higher, but it is worth noting nonetheless.  

The Tale of the Tape: Now that GES has broken above $35, the stock should be headed higher and that $35 level should now act as support on any pullbacks. A long trade could be entered on a pullback to that $35 level with a stop placed below $35. If GES were to break back below $35, a short trade could be entered instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade.  Capital preservation is always key!

 

Good luck!

Christian Tharp, CMT