3 Discount Retailers for Short Term Traders
As shares of Wal-Mart Stores (WMT) make their second significant pullback since rallying into bull market territory in the first half of October, is the time for buying the dip at hand?
Today’s Hot List takes a look at discount retailers, a number of which have begun to pullback from recent 52-week highs. As traders and investors continue to take profits in these stocks, they are moving closer and closer to levels at which buyers have been encouraged to step in and buy the weakness in the past.
Wal-Mart, for example, pulled back for three days in a row at the end of October, shortly after rallying to what were then the highest levels of the year for the stock. The pullback was strong enough to take Wal-Mart to new short term closing lows, as well as drawing near technically oversold territory.
After the third lower close, buyers were back in force, driving the stock higher for the next five days in a row, setting new, 52-week highs in the process.
Unlike the previous three-day correction, WMT’s third lower close on Wednesday was enough to take the stock down to oversold levels. And any additional selling over the next few days will not only put Wal-Mart deeper in oversold territory. The stock is likely to earn a ratings upgrade to “consider buying” status, as well.
Other discount retailers that have begun to pullback from recent highs include Family Dollar (FDO) and Dollar Tree (DLTR). Shares of Family Dollar sold-off for a third day in a row ahead of trading on Thursday and are also trading at technically oversold levels. Off by more than 2% and closing lower for a second straight session are shares of Dollar Tree. Like FDO and WMT, shares of DLTR finished Wednesday’s session in oversold territory.
All of the stocks in today’s report were available from research and data available through PowerRatings. To learn more, click here.
David Penn is Editor in Chief of TradingMarkets.com