Insiders sell Footlocker.

/ The article is not a trade recommendation. /

Some of the insiders at Footlocker sold some of their stock early in the year, although at that time sales are usually tied to accounting practices near the end of the year there is still sell interest.

Fundament

Footlocker trades at higher fundamental ratios than its competitors and the sector average. Against all fundamental indicators except P/BV, the price is above the generally accepted metrics.

The company expects a decline in revenue and profit for this year and for next year.

Bank Expectations

Large investment banks have the highest percentage of “hold” rating – 63.2%. The 12-month price target is at the level of $46.47.

Short Term Indicator

Adjusted EPS is below price and continues to decline, which could put downward pressure in the near term.

Short Term Market Profile

The market profile of the last 30 days shows an increase in volume at $43.00 – $44.50, which suggests that a rise to these values will be difficult and slow, and the area is a potential resistance.

Technical Drawing

Price action is with a bounce from the local and diagonal support ($36 – $38) above 200MA. Possible development of upward movement to $43 – $45.

Conclusion:

Given fundamental valuations, investment bank forecasts and insider selling, I view a rise to the high-volume $43-$45 area as a short opportunity with a potential target of $34-$36. I have to point out that this trade will be against the current trend.

The fact that the general opinion is for selling the stock is exactly what Mr. Varchev is looking for, and today he will buy Footlocker at the first possible price when the US market opens.

Alternative scenario:

Closing above the resistance zone $45 – $47 will spoil the bearish scenario. Stop loss for short is above the resistance zone, measured against the size of the margin account.