Possible top on FLWS

1-800-FLOWERS.COM, Inc. operates a florist and gift shop in the United States. The company operates in three segments: Consumer Floral, Gourmet Food and Gift Baskets, and BloomNet Wire Service. It offers various products, such as fresh-cut flowers, floral and fruit arrangements and plants, gifts, popcorn, gourmet foods and gift baskets, cookies, chocolates, candies, wine, candles, balloons, and plush stuffed animals. The company provides gourmet gifts, such as popcorn and specialty treats from thepopcornfactory.com; cookies and baked gifts from cheryls.com; chocolates and confections from fanniemay.com and harrylondon.com; gift baskets and towers from 1-800-BASKETS.COM; carved fresh fruit arrangements from FruitBouquets.com; steaks and chops from stockyards.com; and invitations and personal stationery from FineStationery.com.

Take a look at the 1-year chart of Flowers (Nasdaq: FLWS) below with my added notations:

Over the last few months FLWS has created a key trendline of support (green) at $7.30 and that line is also the “neckline” for the stock’s head and shoulders (H&S) reversal pattern. Above the neckline you will notice the H&S pattern itself (red). Confirmation of the H&S would occur if FLWS breaks its trendline support, while a move above the $8.50 resistance would negate the pattern.

The Tale of the Tape: FLWS has formed a head & shoulders pattern. A long trade could be made at $7.30 with a stop placed below that level, but ideally, the pattern implies a short trade to be entered on a break below that level instead.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

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