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Deckers’ rally after its recent quarterly earnings release was short-lived. As of this writing, Deckers
is only about 5% above its 52-week lows. This is not a particularly compelling price action unless the stock manages to begin to rebound from these lows - a so-called bearish-to-bullish reversal.
This situation is compounded by the relative weakness we’ve seen in consumer discretionary stocks generally, something we highlighted only a week ago when we wrote about XLY.
Nevertheless, we can sometimes identify trade ideas that look to mitigate sector or industry-specific risks by using a “pairs” trade and taking a bullish position in one company while taking an offsetting bearish position in a company within the same sector or industry.
