With Retailers On the Run, Should Traders Chase?
Of the top seven, highest rated stocks in the S&P 500 heading into the final trading day of the week, more than half are from the retail sector.
Retail stocks have been in the targets of sellers for the past few days, with retail titans like Amazon.com (AMZN) closing lower for a third day in a row and oversold. The selling comes just a little over a week from the official start of the holiday shopping season (i.e., Black Friday, the day after Thanksgiving).
The selling has been widespread through out the sector/ By midway through trading on Thursday, stocks like Liz Clairborne (LIZ), Big Lots (BIG) and Nordstrom Inc. (JWN) had all earned ratings upgrades from “neutral” to “consider buying.” In each case, the ratings upgrades come as the stocks continue to pullback from recent 52-week highs.
Profit-taking in Liz Clairborne, for example, has traders selling the stock for a third day in a row. Down more than 3% ahead of trading on Friday, shares of LIZ are trading just outside of technically oversold territory.
At the opposite end of the retail demographic, Big Lots was also experiencing significant profit-taking after a rally to yearly highs a few weeks ago. Shares of BIG pulled back by more than 2% on Thursday, closing lower for a second day in a row and finishing oversold for the first time since rallying back into bull market territory in mid-October.
Down two days in a row and further along in its profit-taking sell-off than both Liz Clairborne and Big Lots are shares of Nordstrom Inc. (JWN). Nordstrom made its 52-week high in early in the second half of October, and the stock has been trending lower ever since.
In addition to back-to-back lower closes, JWN is down for four out of the past five trading days and deeply oversold. JWN’s last oversold finish came at the end of a five day sell-off in late September/early October. The stock soared by more than 8% the next day and was higher by more than 13% a week afterwards.
The stocks in today’s report were drawn from the data and research available through PowerRatings. To find out more, click here.
David Penn is Editor in Chief of TradingMarkets.com