timwest
Short

PAIRS TRADE: SELL SHORT KORS, GO LONG COH

NYSE:KORS   MICHAEL KORS HLDGS LTD
339 4 5
Michael Kors KORS - Daily (sell short) either outright, if you are unfamiliar with PAIRS TRADING. Or as a pairs trade, sell short KORS versus going long in Coach Inc             COH             (go long)

Sell Short KORS 94.10 last -0.23
Buy Coach COH             40.50 last +0.51

I've been waiting for awhile to get a good technical setup on KORS as a short sale. The setup I wanted to find was a rally into a key resistance area. What we have here is just that. KORS is just under the level where earnings were released back on May 28th (note the chart shows 8th). The near perfect LINEARITY of the advance in KORS is spectacular, but I have to say that when you see a great, high quality brand like Coach COH             down in the dumps while at the same time you see KORS overbought at very high valuation levels of 6 times sales, which is a level reserved for Biotech, High Tech, Drug Company's and other "high moat" investments, then I have to call this a LOW RISK trade.
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timwest PRO
2 years ago
RISK 3% on the pair to make 10%. 3 weeks time frame anticipated.
RISK 5% (or 3 Avg True Ranges) on an outright short in KORS.
Reply
timwest PRO
2 years ago
KORS is dropping nicely from this forecast - KORS is down from 94.10 to under the 89 level.
COH is almost back to unchanged at 40.38 last.

KORS is down 5 pts or more than 5% so far for a 5% return for this pair.

10:19AM Tuesday, June 17, 2014
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steve-erickson
2 years ago
Well the LONG COH is killing me. Good example how technical analysis loses to fundamentals such as falling sales and profit margins.
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timwest PRO steve-erickson
2 years ago
I hear you Steve. It's frustrating to lose. The KORS finally kicked in today and dropped like a stone. I view technical differently than you... sometimes it leads and sometimes it lags. I don't chose to use the word "loses" when referring to one versus the other. It is just a matter of fact that none of us "KNOW" what will happen next, but we can look for clues and signs that something is wrong. Fundamentals lag terribly in every instance of stocks topping out. Often times a stock will fall 40% or more before you catch the justification from "falling sales and profit margins". We all monitor what we can to see what is around the corner, but we can't actually see what is around the corner, so we all are just left guessing in the end using either methodology, or both. Here's wishing you well and I hope you were short KORS.
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