Tuesday, January 29, 2008

Is Deckers Ready to Run?

My trade idea of the day is Deckers Outdoor (DECK).

DECK is the maker of the popular Ugg boots, and also Teva sandals. The stock gapped higher back in October (see chart) after reporting a strong quarter. And lately I've been hearing a lot of chatter that the Ugg boots continue to sell like wildfire.

A salesperson at Nordstom (JWN) said that they simply can't keep the Ugg boots in stock, and that they are currently taking up more floor space than any other brand. I noticed this when I went to Nordstom's during the holidays to look for a pair for my daughter. Everyone was buying them, and they were sold out of her size.

Technically, the stock has come down well off its highs hit at year-end. It has pulled back almost -30%, and has filled that gap that I mentioned on the charts back from October. That should be a good place for the stock to find naturaly support.

And with the Fed cutting interest rates, retail stocks have started to show signs of life again. DECK has led the retail sector for years, and I think it still has some life left in it. The stock could be a good trading candidate for a bounce.

The stocks also looks like it is finding good support near its 200-day average. I want to watch the stock a bit to make sure these levels hold, but I am putting it on my radar to buy in the near future.


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