Carter’s, Inc. (NYSE: CRI)

Carter’s, Inc., together with its subsidiaries, designs, sources, and markets branded children’s wear. The company provides products under the Carter’s, Child of Mine, Just One You, Precious Firsts, OshKosh, and related brand names. Its Carter’s brand baby products include bodysuits, pants, undershirts, towels, washcloths, receiving blankets, layette gowns, bibs, caps, booties, playclothes products, sleepwear products, bedding, outerwear, swimwear, shoes, socks, diaper bags, gift sets, toys, and hair accessories. The company sells its products in department stores, national chains, and specialty retailers, as well as through its Carter’s and OshKosh retail stores; and online at carters.com and oshkoshbgosh.com. As of June 30, 2012, it operated 385 Carter’s and 166 OshKosh outlet and brand retail stores in the United States; and 73 retail stores in Canada. The company was founded in 1865 and is headquartered in Atlanta, Georgia.

To review Carter’s stock, please take a look at the 1-year chart of CRI (Carter’s, Inc.) below with my added notations:

CRI embarked on a nice rally from August of last year until this April. Since then though, the stock has settled down into a Rectangle pattern over the last (3) months. A Rectangle pattern forms when a stock gets stuck bouncing between a horizontal support and resistance. For CRI, the Rectangle pattern has formed a $55 resistance (brown) and a $50 support (navy).  You will notice that CRI’s $50 support was also a resistance earlier this year.

The Tale of the Tape: CRI has formed a common Rectangle pattern. The possible long positions on CRI would be either on a pullback to $50, or on a break above $55. The ideal short opportunity would be on a break below $50.

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