Abercrombie & Fitch: A momentum play after Q3 release?

I can't be the only one thinking that today's bid is not in step with rational thought, but it sure feels that way. Maybe I have to soften my view and go with the tape. After all, according to Reuters, expectations were surpassed by a wide margin, and an analyst pointed out something that makes sense: the company probably will have a good chance of posting results pleasing to Wall Street since comparisons will become more attractive as time goes on.

Then why do I still sense danger with Abercrombie's stock? Quite frankly, I've been sensing danger for most of 2009. I've incurred many opportunity costs by ignoring the rising market. As frustrating as that is, I'd rather suffer an opportunity cost than a real loss.

Abercrombie hit a new 52-week high today, and it looks like it will be heading higher. If you've got the stomach for risk, you could try the stock on a pullback. Like they say, going with what's working is oftentimes the best advice for traders.

Be sure, though, that you are at least reasonably confident that the holiday season won't be a total disaster. Chains such as Kohl's (NYSE: KSS), American Eagle Outfitters (AEO), and Gap (GPS) will all be viciously competing for consumer traffic. It's bound to get financially tough for a lot of these retailers.

Disclosure: I don't own any company mentioned; positions can change without notice.