Retail Sector Selloff Could Be Nearing an End
Yesterday, electronics retailer hhgregg, Inc. (NYSE: HGG) announced fourth quarter results that disappointed investors and the stock fell 19.32%. Competitor Best Buy (NYSE: BBY) also sold off and fell 5.21%. HHG and BBY are now both oversold with PowerRatings of 8.
PowerRatings are based on the relative strength or weakness of particular stocks or ETFs. The higher the rating, the greater the one week historical gain has been for stocks and ETFs with that rating. For best results, enter trades on stocks with a PowerRatings of 8 or higher with a limit order 3-7% below the previous day’s closing price. Higher % limit entries have historically shown a greater percentage of winning trades but higher % limit orders also reduce the chance of trade execution.
SPDR S&P Retail ETF (NYSE: XRT) is also oversold with a PowerRatings of 9.
In the past, buying stocks with a rating of 9 on a 3% pullback the next day and selling five days later has been profitable 75% of the time. The average winner has gained 4.3%. Other entries and exits also show high winning percentages and large average gains.
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All data is as of the end of day on 1/30/2014.