Stock Chart Analysis GYMB

Posted by downtowntrader | 1/27/2008 09:29:00 PM | 0 comments »

Stock Chart Analysis GYMB

The Gymboree Corporation (Public, NASDAQ:GYMB)

Retailers had a nice bounce the past few sessions as lower rates and extra money courtesy of a stimulus plan are giving hope to many that a recession can be avoided. However, the threat of a recession is very real, and most retailers will suffer if consumers are tapped out. While there is still a chance of further rallying from retailers due to coming news related to a stimulus package, some are starting to look like they are ready to pullback again.

GYMB has had a sharp move off it's lows recently and is actually up nicely for the year, which is shocking considering how poorly the markets have fared. While I would typically avoid shorting a stock showing such strong relative strength, GYMB is still technically in a down trend and is up against stiff resistance. It's also had enough of a rally to work off any oversold readings it had. The chart below is showing a candle pattern named an evening star reversal pattern which often kicks off a reversal. The fact that it occurred just below the 200 day sma and horizontal resistance validates the signal further in my opinion. I would think $37 will remain as resistance but the nice thing about trading a pattern like this is the clear signal to cover the short if it doesn't work out.

Good Trading,


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