Selling Stocks Short; January 18, 2008

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We closed our short on this earlier this morning.

We shorted this thing a little while ago at 45 or so and bought it back just a few minutes ago at 30 and some change.

I don't think that you trim 33% off a stock price in a couple of weeks just because of marketing expenses. When you look at this thing, Wachovia downgrades it a notch. The guy at Wachovia doesn't have any institutional stroke and just a notch is nonsense.

Bank Amigo has just re-iterated to buy more. No kidding.

Investors have taken a 30% haircut over the past month and we just now are getting around to lowering the rating? And we're telling people this is a buying opportunity?

Analyst drivel makes me sick.

From what I undestand, UA is ramping up commercials for the Super Bowl. They have a May 1 launch for their new running shoes. If these things don't set the world on fire, UA is in for a world of hurt.

From my perch on the trading desk, it isn't the product, BUT it's keep the promise to get the product on the shelves. I'll be in line to buy a new pair on May 1. If I'm not totally happy, I'll short any pop in the stock

RAC
The Stock Trading Advisor


Here's the AP Story.

Wachovia Downgrades Under Armour on Spending Plans for Marketing Footwear

NEW YORK (AP) -- Shares of Under Armour Inc. tumbled in premarket trading Friday as a Wachovia Capital Markets analyst downgraded the athletic-apparel maker after it said earnings in the first half of 2008 should miss expectations due to marketing expenses.

Under Armour lost $6.06, or 16.4 percent, at $31 before the opening bell. It closed at $37.06 on Thursday.

After the market closed on Thursday, Under Armour forecast earnings between 3 cents and 5 cents per share in the first half of the year, while analysts polled by Thomson Financial expected profit of 39 cents per share during the combined period.

The company said it would incur heavy marketing expenses to advertise its cross-training footwear, including a pricey ad during the Super Bowl broadcast.

Under Armour said results should improve during the second half of the year and offered full-year guidance ahead of expectations.

Analyst John Rouleau said the move is a gamble amid the weakening retail environment.

"While we had anticipated that earnings might be significantly back-end weighted, the magnitude of the shift is much more severe than we imagined," he wrote in a note to investors. "While our channel checks suggest sell-throughs and brand momentum remains strong, the slowdown at retail combined with big inventory increases and the uncertainty surrounding launch of the cross-trainers lead us to step to the sidelines on the stock."

He downgraded the company to "Market Perform" from "Outperform."

He also cut yearly estimates to $1.26 from $1.28 per share.

Banc of America Securities analyst Robert Ohmes, who rates Under Armour "Buy," said any stock-price adjustment should be used as a buying opportunity.

"(The) cross-trainer launch should be well received and positions Under Armour for additional (larger) footwear category opportunities," he said.

Sell Stock Short; January 8, 2008

The Stock Trading Advisor; January 8, 2008

Today appears to be just another day on the south side of town. After being up most of the day, the market’s got drilled when Countrywide Financial was rumored to be readying a bankruptcy filing.

This isn’t overly complicated. The talking heads may think it is but it isn’t. The other shoe is ready to drop. Subprime is still the word of the day as Bear Stearns’ chief Jimmy Cayne is headed for the showers. Merrill Lynch says we’re in a recession and the Fed is still up in the air about rates. Is there anyone left who cares?

Nothing has changed – more sellers than buyers. We’re still on defense with a couple of shorts and some really tight stops on our long positions.

The perma-bulls are having a tough time with this market. The indicators say DEFENSE and that’s where we are. If you want to learn more about my indicators, just send me an email and I’ll be happy to reply.

We’re still short General Motors (GM) and Under Armor (UA). I’m looking for me shorts tonight.

It’s ugly and could get bleaker before the bulls bust loose. Keep your hard hat on and stay low.

RAC
The Stock Trading Advisor