Hey Gang,

These are the kinds of trading days I dream about!

I caught an awesome 100% winner betting on a market drop on Thursday…

And I’m here to tell you, this could just be the beginning.

In just two days, the S&P 500 rebounded from correction territory to wipe out all the losses from last week.

Yet, I see a lot of weakness beneath the surface.

That’s why today’s trade idea isn’t a bullish play but a bearish one.

Yes, that’s pretty unusual for me. Because despite my last name, I typically buy high and sell higher.

But there’s a setup in Burlington Stores (BURL) that I think is worth discussing.

While I’ve played this stock from the long side many times in Profit Surge Trader over the past year…

…winning +85% of those 14 trades…

I believe the tides are turning against the retail sector in the near term.

To see what I mean, let’s take a step back and look at the big picture.

Current Market

You know you’ve got volatility when the nightly news starts talking about the stock market.

It’s true that the latest drop was the fastest we’ve entered a correction since the pandemic, and, before that, 2018.

That’s not what really concerns me.

What I’m worried about is the ‘orderliness’ of this selling.

We haven’t seen the VIX spike over 30, nor broad-based selling.

Yes, tech stocks are taking it on the chin. But utilities and consumer staples are holding up relatively well.

Now, I understand these are ‘safety’ stocks traders flock to during downturns.

But true market bottoms happen when everything pukes.

And that’s not what we’re seeing.

The financial media is blaming tariffs, and I think that’s partly true. They certainly create uncertainty. But they’re more of a catalyst to pull some froth out of the market.

I don’t know how far we might ultimately drop. That depends on whether this pullback blossoms into a full blown crisis. I haven’t seen any signs of that…yet.

So, for now, we’re taking this as one of the typical corrections that happens every year or so.

Normally, that would mean I have bullish plays to offer. And there are plenty I cover with Profit Surge Trader members.

However, I think it’s important to have some hedges just in case things keep falling.

Right now, retail stocks are taking it on the chin.

The S&P Retail ETF XRT is on the cusp of a bear market, down almost 20% from its recent highs.

Given the sector’s heavy reliance on international supply chains, I’m not surprised that tariff threats are hitting them particularly hard.

Burlington Stores (BURL) is down more than 22% from its recent highs.

And on the daily chart, I’m seeing a bearish TPS setup form that’s worth discussing.

Burlington Stores

Looking at BURL’s chart, there’s a perfect bearish setup forming that my S.A.M AI Scanner immediately flagged.

First, we have that strong downward move that knocked the stock from nearly $290 down to the $230 range – a brutal 20%+ decline.

But what’s most interesting is what happened next – instead of bouncing back, we’re seeing a tight consolidation pattern with lower highs. The stock is struggling to recover, which tells me sellers are still firmly in control.

This setup uses my TPS framework, which incorporates the following:

• Trend – A clear downward trend where each low is lower than the last, with price sitting below all major moving averages.
• Pattern – A tight consolidation pattern forming with lower highs, showing sellers remain in control even during pause periods.
• Squeeze – Those red dots at the bottom of the chart indicate the Bollinger Bands have moved inside the Keltner Channel, signaling a potentially explosive move lower.

The moving averages tell a clear story too. Notice how they’re perfectly stacked – the 8 below the 21, and the 21 below the 55. This is textbook bearish alignment.

With retail stocks already under pressure from tariff threats and consumer spending concerns, this technical setup gives us an excellent opportunity to profit from further weakness.

Why This Trade Makes Sense Now

Burlington isn’t just struggling technically – there are fundamental headwinds hitting the entire discount retail sector:

1. Rising supply chain costs due to new tariff threats
2. Inventory management issues as consumer spending slows
3. Margin pressure from increased competition
4. Technical breakdown across the entire retail sector

While many traders are still trying to catch falling knives on the long side, I’ve found that playing the downside during clear technical breakdowns like this can be effective in obvious downtrends.