If the SHOO fits,…buy it! Here’s my take on Steve Madden Shoes. (September 10, 2018)


I want to look at Steven Madden ( NASDAQ: SHOO ) today. First of all, if you just look at the Retail Sector ( NYSEARCA: XRT ) it is still doing okay. Some of the other sectors are really starting to bleed off a little bit but Retail is hanging in there all right. The reason that I am talking about Steven Madden ( NASDAQ: SHOO ) is because it is getting close to a pretty good entry. Full disclosure: I have a position here.

What we are really looking to see here is more sideways consolidation to give the chart enough time to set up. What I mean by that is, from where the stock is right now, everybody that bought in this red box is losing money. So just from a kind of a psychological and behavioral finance point of view you want to see more days go by, you want to see more time pass where the stock stays in this range.

Part of the reason why the stock would be staying in this range is because some of the folks that bought here are selling, they are called weak hands. Maybe they are just trying to get their money back. Maybe they found something else, whatever the case may be, but they are just kind of slowly selling the stock. You don’t want to see a big decline here like this because what that tells you is there are no buyers.

But if the stock will just kind of trade sideways here for a bit that will reflect kind of an equilibrium at these current levels in the mid to high 50s; where you have got demand for the stock, still above the 50-day moving average and you have still got supply of the weak hands. And then over time, maybe over the next week or two, this stock will build up enough of a base to where it can move to the upside.

The reason I am covering this now is because I like to give you these types of setups when I can. I like to give them to you in advance so you can watch them; you can track the stock, maybe take a position at the time that is right for you. And then you are actually making money when I come back around to the stock, versus me saying, “Hey, look what happened yesterday. Wouldn’t it have been nice if you had bought this stock?”

So I am trying to kind of give you a little heads-up on SHOO ( NASDAQ: SHOO ) here because I really do think this can be a pretty good trade; at least I hope so, I’m in. This is the way you trade it though: You are in the stock now; I wouldn’t give it more than 4 percent of room to the downside. You can give it quite a bit more room if you want but it totally depends on what your holding period is.

For me, because I am looking to the stock to hold at or around, it doesn’t have to be exact, but because I am looking for it to hold right around the 50-day moving average then I can keep my stop just a little bit below 55.00. That way I give the stock a little bit of room to move and I am only stopped out if I see the stock break trend, break below the 50-day moving average, and hit my exit target here.

That is how I would trade Steve ( NASDAQ: SHOO ). Look to hang on to this stock; you have got to expect a holding period of at least a month maybe even more. They don’t report earnings until the end of next month and so perhaps this stock can kind of start an earnings run from here and give us a nice reward before we sell prior to earnings. So stop below 55.00; I think that gets it done for you.

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