Short on Victoria's Secret
To begin, I am not a Seasoned Trader; I use this blog for:
1. Record keeping; &
2. Formalizing my thoughts
a. If I can't explain simply here, I shldn't engage
To begin, my Rules of Engagement ( RoE ) to identify an upside of +3 to 1 Risk to Reward ( “R/R” ).
• Asset | VSCO ( Victoria Secret )
• Type | Equity
• Position | Short
• Entry | $ 39.52
• Stop Loss ( SL ) | $ 41.11
• Target | $ 30.32
• Exp. Time Horizon | ~1 – 2 Wk’s
• Allocation | 2.5%
• R/R | 3.60 – 5.06
To begin, I will highlight the reasons why I am apprehensive about the trade ( the Con’s ) & finish up with the reasons why I’m interested in the position ( the Pro’s ). The issues / thoughts that make me uneasy ( the Con’s ) are:
• Irregular nature of the current market
o We are in a “Bear Market Rally”. Although, they always come to an end & will proceed lower, picking when is almost impossible.
• Sentiment
o Although the UofM sentiment is low, it is rising.
• FedWatch Tool
o The FedWatch tool only prices a 25 bp rate increase; that would be their first 25 bp increase in many reiterations but that’s what the market is saying.
• Share Repurchase Program
o They authorized the repurchase of up to $250 million of the Company’s common stock will be made in the open market, subject to market conditions and other factors; this year ( 2023 ).
o They could buy me out.
• PMI’s
o ISM New Orders #’s for Apparel are 0 ( i.e. not really falling “just yet” )
o These #’s will be updated the day before the Fed Meeting this Wednesday.
Now, the reasons I am interested in this position ( the Pro’s ):
• Sentiment ( cont. )
o As mentioned above, UofM Sentiment is rising albeit
• PMI’s
o ISM #’s for Apparel are within the middle of the range of “below 50”.
• Retail Sales
o I don’t see much correlation with these against VSCO; something to mention.
• Employment
o The Employment Situation in the US is favorable for employee’s. I could go through ALL of the employment metrics albeit I will say Initial Jobless Claims is the most volatile & while it “was” rising, it re-started it’s decline.
o Why do I care about this? Because this trade has more to do with the Federal Reserve decision & while Inflation is falling, Oil is rising ( albeit should not be with the recent Inventory #’s coming in ) meaning the Fed’s Inflation concern is still worse than it’s employment one; this means, a 50 bp rise is “likely”
To summarize, this Trade has A LOT to do with the Fed meeting this Wednesday. I believe they will raise interest rates by 50 bp’s but the FedWatch tool has it at 25 bp’s.
Financial Disclaimer | To reiterate, I’m not a Financial Advisor. If you engage based on the contents herein, you will lose money. If you interpret that mean by doing the opposite you will make money, that’s incorrect; you will also lose money.
Thanks for your time; I hope you have a lovely day.
1. Record keeping; &
2. Formalizing my thoughts
a. If I can't explain simply here, I shldn't engage
To begin, my Rules of Engagement ( RoE ) to identify an upside of +3 to 1 Risk to Reward ( “R/R” ).
• Asset | VSCO ( Victoria Secret )
• Type | Equity
• Position | Short
• Entry | $ 39.52
• Stop Loss ( SL ) | $ 41.11
• Target | $ 30.32
• Exp. Time Horizon | ~1 – 2 Wk’s
• Allocation | 2.5%
• R/R | 3.60 – 5.06
To begin, I will highlight the reasons why I am apprehensive about the trade ( the Con’s ) & finish up with the reasons why I’m interested in the position ( the Pro’s ). The issues / thoughts that make me uneasy ( the Con’s ) are:
• Irregular nature of the current market
o We are in a “Bear Market Rally”. Although, they always come to an end & will proceed lower, picking when is almost impossible.
• Sentiment
o Although the UofM sentiment is low, it is rising.
• FedWatch Tool
o The FedWatch tool only prices a 25 bp rate increase; that would be their first 25 bp increase in many reiterations but that’s what the market is saying.
• Share Repurchase Program
o They authorized the repurchase of up to $250 million of the Company’s common stock will be made in the open market, subject to market conditions and other factors; this year ( 2023 ).
o They could buy me out.
• PMI’s
o ISM New Orders #’s for Apparel are 0 ( i.e. not really falling “just yet” )
o These #’s will be updated the day before the Fed Meeting this Wednesday.
Now, the reasons I am interested in this position ( the Pro’s ):
• Sentiment ( cont. )
o As mentioned above, UofM Sentiment is rising albeit
• PMI’s
o ISM #’s for Apparel are within the middle of the range of “below 50”.
• Retail Sales
o I don’t see much correlation with these against VSCO; something to mention.
• Employment
o The Employment Situation in the US is favorable for employee’s. I could go through ALL of the employment metrics albeit I will say Initial Jobless Claims is the most volatile & while it “was” rising, it re-started it’s decline.
o Why do I care about this? Because this trade has more to do with the Federal Reserve decision & while Inflation is falling, Oil is rising ( albeit should not be with the recent Inventory #’s coming in ) meaning the Fed’s Inflation concern is still worse than it’s employment one; this means, a 50 bp rise is “likely”
To summarize, this Trade has A LOT to do with the Fed meeting this Wednesday. I believe they will raise interest rates by 50 bp’s but the FedWatch tool has it at 25 bp’s.
Financial Disclaimer | To reiterate, I’m not a Financial Advisor. If you engage based on the contents herein, you will lose money. If you interpret that mean by doing the opposite you will make money, that’s incorrect; you will also lose money.
Thanks for your time; I hope you have a lovely day.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.