Saks Broke Support

Published on Thursday, 12 January 2012 19:20 Written by Christopher Lynn

New York, January 12th (TradersHuddle.com) - Shares of Saks, Inc. (NYSE:SKS) closed the trading session at $9.20 below calculated support at $9.50 breaking the stock technically, raising concerns by investors, as the move might trigger more selling.

Saks, Inc. (NYSE:SKS) operates department stores in the United States under Saks Fifth Avenue and Saks Fifth Avenue OFF 5TH (OFF 5th) brand names. The stores offer a wide variety of branded and private label merchandise including luxury apparel, shoes, accessories, cosmetics, and decorative home furnishings.

Saks' stock was trading in a well defined range with support at $9.50 and resistance at $10.20; given that this range was broken traders will be closely monitoring the stock's price action for clues of direction.

From a technical perspective it can be expected that previous support becomes resistance, as the new range gets defined, however, given that Saks' stock is still near the broken support, traders will be focusing on $9.50 to see if the stock can bounce back and return to its previous range.

Traders wanting to establish a short position in Saks can do so if the stock breaks the intraday low, or if the stock bounces back and selling materializes again at previous support of $9.50. For traders wanting to establish a long position, wait for price action to take the stock back to calculated support, which will provide a best entry point to build the position.