Restoration Software?

The consumer discretionary space has been somewhat soft in recent months. Some names have bucked the trend, while others have felt the weight of the selling. Below is the chart of a long term winner in Restoration Hardware, which is higher by more than a double in 2020 thus far. It has certainly benefitted from the “stay at home” theme, but truth be told it was acting well before that. In the depths of March is touched the lows 70s, and was pushed back near the round 500 figure earlier this month (it was hampered by the round 400 number for 2 months between 9/11-11/11 before piercing through). There are some signs that the stock could be ready for a soft patch, as a bearish engulfing candle was recorded Monday (immediately prior was an 8 session winning streak which fell in volume with each successive session), which retested a prior dark cloud cover candle, giving a decent risk/reward scenario for a short, or at least to take some off the table if one currently has a position. This has been a leader so anyone venturing with a short, should make it a brief rental. 

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