Don’t Buy Abercrombie Dip, Say Pros
Shares of Abercrombie and Fitch were taken out to the woodshed on Wednesday; in fact around lunchtime it was the worst performer on the S&P 500.
The retailer’s 3rd quarter earnings missed analyst estimates with margins also getting squeezed.
Of course, Abercrombie had been a trader’s darling with shares climbing earlier in the year, sometimes even when the over-all S&P 500 was in broad decline.
Is the recent dip a buying opportunity, ahead of the next leg up?
Strategic investor Dennis Gartman doesn’t think so.
”The chart is one of the worst looking charts I’ve ever seen,” he says.
”And I was just walking by the Abercrombie & Fitch store in NYC – last year there was a line out the door and this year you could breeze right through. There aren’t as many people trying to get into that store.”
Trader Steve Cortes is also negative. Like so many other specialty retailers, he feels this is yet another retailer that's ahead of itself. "I think we're looking at macro-economic weakness and retailers are extremely vulnerable here. Last year they under-performed during the holidays and I think it happens again."
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CNBC.com with wires.