Wall Street is buzzing about Deckers Outdoor (DECK – NASDAQ)’s “surprise” gap down on news of a disastrous slip in quarterly profits.
According to company insiders, the problems are two fold: first, a spike in sheep skins pushed up the cost to assemble Deckers’ UGG line of sheepskin lined boots. Then a warm winter in the US, trashed sales of these overpriced overshoes.
Now Deckers is in a position similar to the one faced by American car companies a few years back, when they couldn’t shift out from trucks to small cars: A hot summer will probably boost sales of Deckers’ Teva sandal line. Unfortunately, a pair of Tevas sell for less than half a pair of UGGS.
Trading Tip: You don’t have to be an expert in fashion to trade stocks like DECK. The traders who do follow DECK showed their hands months ago, when shares put in two clear Sell Signal Stacks.
But don’t abandon this stock! DECK is now oversold, and those same traders will tell you exactly when DECK becomes a hot buy again, with an equally clear Buy Signal Stack. Watch for a bounce at the bottom line of the price channel, confirmed by rising Accumulation and an MACD Buyers Cross.
