Thoughts on Options Expiration Part II

Target and the state of retailers are a bit confusing. The recent retail number was absolutely terrible. That is why I tend to believe that worst is behind retail. But continued weakness in the economy as well as rising gas prices in addition to the threat of hurricanes this year can threaten further economic deterioration. Retailers are too hard at this point and I change my mind on playing the earnings report for Target.

I will still keep my 20 contracts for June $62.50 and see what happens, knowing that curiosity may kill the cat. But, no big deal. Upside surprise can be huge and 20 contracts are not worth that much anyways.

Weekly Chart of TGT

Back in October, TGT started to make a bearish flag formation, a warning sign, despite the strong run up in prior months. It ran up and then ran into resistance and since then to my interpretation has formed a bullish flag formation OR break in the sideways consolidation. Volume is increasing on the sell side. I believe now that there is more downside to go. We will see what happens.

Bearish on TGT.