I Am Washing my “HANS” of This Consumer Discretionary Name

by Dan September 29, 2011 3:15 pm • Commentary

Looking at the damage done today in consumer names today I am actively looking for those that haven’t broken yet…..This action is downright disgusting; LULU -5%, CMG -4%, COH -8%, TIF -9%, ANF -6% , GMCR -11%, AMZN -5%.  Others will certainly play catch up.  

HANS sticks out to me as a name that could see some downside in a market like this….Chart below shows the massive divergence between HANS and the SPX… something has to give here….

[caption id="attachment_5077" align="aligncenter" width="300" caption="SPX vs HANS 1 yr chart from Bloomberg"][/caption]

TRADE: HANS $87.20 I just Bought the OCT 80/75 Put Spread for 1.00

-Bought 1 Oct 80 Put for 2.05

-Sold 1 Oct 75 Put at 1.05

Break-Even on OCT exp: 

Profits btwn 79 and 75 make up to 4.00, below 75 make 4…

Losses btwn 79 and 80 lose up to 1.00, above 80 lose 1.00

TRADE RATIONALE: This trade is not high conviction as I don;t have a great handle on the fundamentals, I know it trades at a rich valuation to it’s peers….but I guess the chart and its relative performance of late is enough for me to dedicate a small amount of $ to short term trade…..I am risking what I am willing to lose….Generally I don’t want to press shorts after a sell off like we have seen in the last couple days….but if we make a new closing low in the coming week, nothing will be spared and names like this should get destroyed as evidenced by the price action of some of its peers today.