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Tickers in this Article: ROST, JNY, ANF, GYMB, CTRN
There are several apparel retailers that are looking vulnerable at a time when the general markets are at a critical juncture. Overall, the markets are trading in a location that could mark the end of a typical correction, and thus mark a near-term bottom. However, the markets could also be completing a more serious looking topping pattern, which would implicate a much more serious decline.

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When I initially looked at this sector, it was after noticing a bullish setup in Ross Stores (Nasdaq:ROST). But, after drilling down, the rest of the sector didn't look as healthy. In fact, several stocks were looking vulnerable as they traded under recent consolidations.

Jones Apparel Group (NYSE:JNY), for instance, broke under a four-month consolidation late in January and has been attempting to stabilize near its 200-day moving average. The consolidation looks more like a top at this point, and JNY could face considerable selling pressure on an attempt to climb back in to the base.


Abercrombie and Fitch (NYSE:ANF) has a different looking chart, but is facing a similar prospect. ANF attempted to break out out late in 2009, but failed rather quickly, and headed even lower early in 2010. It appears the $35 level has been a battleground for this stock, and currently ANF is underneath this level. It attempted to rally into the level last week on a gap, but faced considerable selling pressure and ultimately backed off. This would be an area to watch moving forward as well as the $30 level underneath.


The Gymboree Corporation
(Nasdaq:GYMB) has also been trading in a base for several months and recently dropped underneath it. It quickly rebounded back into the base, but is struggling with a declining 50-day moving average. The $40 level looks like an important level for GYMB, and a break back underneath this level could lead to new lows.


Citi Trends (Nasdaq:CTRN) is another apparel retailer trading near the bottom of an established range. It hasn't technically broken down, but appears to be vulnerable to further downside. The $26 level has been important support recently, halting declines several times over the past few months. CTRN has also been capped near $31, with the last failure in early February leading to a quick trip back down to the bottom of the base. $26 is the key level to watch in the near future, as a break below could put a large group of traders under water.


Bottom Line
While much of what happens next to this group is directly tied to the next move in the general markets, all of these stocks have been acting weak as they approach important levels. It is a mixed environment, with some stocks still acting well, but the majority showing signs of deterioration as the market attempts to correct the rally from the past several months. If the markets are indeed topping out, these stocks may break under the important levels highlighted above. If the market finds its footing, these levels may be cemented as longer term support. Sometimes as traders, it's best to stand aside as you watch key levels to see how the markets react. It's likely that this is one of those times.

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