KSS Trade on May 12, 2016 10:24 from tradephd: Tradervue User Stock Trades.

Play Idea

During the second week in May 2016, retail stocks took a major hit as companies like Macy's, Kohl's, and Nordstrom all reported bad earnings and also provided weak outlook for future sales. Macy's was the first to fall and fall it did. It was probably the easiest stock to trade on the short side because it did nothing but slide for most of the week. I was able to play Macy's a little bit, but I didn't take advantage of it like I should have. I didn't want to miss the same opportunity in Kohl's.

Kohl's suffered a 3.9% decline in same-store sales, leading to a sizable shortcoming in the retailer's earnings estimates.
via TheStreet

After I saw Kohl's gapped down after their earnings report the day before I was sure that I wanted to watch the stock the next morning and plan a short position. I knew I didn't want to trade it right at the open because I was afraid of a spike because of people trying to buy it right away because it gapped down to a cheaper price. So I just watched for the first 30 minutes. At 10:00am it really started it's downward move. I was a bit hesitant because I wanted for it to consolidate a bit in order to start my short position. My price target was $34.50 and once it hit that I covered.

Conclusions

This was great trade to make and I'm adding it to my playbook so I can look for it again in the future. Doing an intraday or multi-day short on a stock that reported bad earnings is probably one of the easiest ones to make. You just start your position, sit in the trade, and hold the position until you have a reason to cover. The stock will eventually bounce and recover, but the downward trends that these types of stocks can have are usually very consistent. However, if I could do this again I would have been more aggressive by starting a position earlier, sizing up to twice the size of shares for the position, and then waiting to cover until I have a good reason to cover like a bounce or reversal.