The great artist Meatloaf told us that “two out of three ain’t bad” and the charts are telling us the same when it comes to three of the larger retail names out there. Kohl’s Corporation (NYSE:KSS), Best Buy Co Inc (NYSE:BBY) and Macy’s Inc (NYSE:M) are the three big stock charts we’re looking at today.
The earnings season continues into the second half of the week as we start to see reports coming in from the retail sector. For the most part, traders and investors have thrown these companies by the side of the road, but the charts suggest that there are some names worth taking a closer look for additions to portfolios.
Kohl’s Corporation (KSS)
Discount retailer Kohl’s has had a rough go of it as the company has had to go through store closings and management changes to try to right the ship of this once hot stock. Today’s earnings report has KSS shares trading more than 1% lower ahead of the open, but there were signs in the report that the company is seeing a turnaround.
What does the chart say?
- Kohl’s stock has spent the last six months building what may be a long-term bottom for the shares to rally from. The shares recently broke above their 200-day moving average as they rally towards $45.
- The recent strength in KSS has resulted in a bullish signal from the stock’s 50-day moving average, which is now trending higher. This is the first time that the stock has seen this signal since October 2016 ahead of a massive rally in Kohl’s stock.
- The short-term overbought indication is likely to add selling pressure to KSS stock, but traders are likely to buy these shares on the dip as they are moving into a long-term bull market trend.
Best Buy Co Inc (BBY)
Best Buy won’t report until next week, but the company dazzled traders last quarter and shot more than 20% higher. BBY stock is moving to new highs ahead of its earnings report, which means that we could see a “sell the rumor” correction over the next five days.
Are the shares a buy right now?
- Best Buy surprised investors with a great report last quarter, so we’re expecting to see more buying of the rumor over the next week, but there’s a catch …
- BBY stock just hit an overbought reading of its RSI this week, which may put some selling pressure on the stock over the short-run, but there’s some chart support that should help the stock set-up for its next rally.
- Round number support/resistance has been established at $60. This level acted on BBY stock in June and July and is in place to support shares on a slight pullback over the next week, which would allow for the shares to work off their overbought indication and set-up a bullish opportunity ahead of the report.