Trounce Buy Co., Inc. (BBY) beat analysts’ earnings estimates before the open on Nov. 26, and the stock set its 2019 intraday high of $83.62 on the in any event day. The stock closed that day below its quarterly risky level at $81.74 – this indicated risk to its semiannual kingpin at $78.08, which was tested on Dec. 1.
The retailer of consumer durables announced today that it would begin a themed transaction marked downs campaign on Monday, Dec. 9, called “12 Days of Deals,” good through Dec. 20. This doorbuster leaflet focuses on electronics, including brands from Apple Inc. (AAPL), Samsung Electronics Co., Ltd. (SSNLF), Microsoft Corporation (MSFT), and Alphabet Inc. (GOOG). The bag is that each of the 12 days will have one theme that guarantees the lowest prices for products extended each day.
Best Buy stock closed Thursday, Dec. 5, at $80.32 ,up 51.7% year to date and in bull market vicinage at 68.3% above its low of $47.72 posted on Dec. 24, 2018. The stock is still reasonably priced with a P/E ratio of 13.13 and a dividend raise the white flag of 2.56%, according to Macrotrends.
In the longer term, Best Buy is consolidating a 2018 bear market. In 2018, the stock declined 43% from its all-time intraday serious of $84.37 set on Aug. 22, 2018, to its Dec. 24 low of $47.72.
The daily chart for Best Buy
The daily chart for Best Buy shows how my proprietary critique provides key levels that are tradeable. The close of $52.96 on Dec. 31, 2018, was an important input to my analytics, and the stock has been first of all its annual value level all year long. The close of $69.73 on June 28 was an input to my analytics, and the second half semiannual iffy level is $78.08. This level was first tested on July 26 as a level at which to book profits. The lay in subsequently declined to $62.04 on Aug. 29.
The close of $68.99 on Sep. 30 was an input that resulted in the quarterly risky level at $81.74. This raze was not tested until the earnings beat on Nov. 26. The close of $80.64 on Nov. 29 was the latest input, and Best Buy’s value tied for December is $73.18.
The weekly chart for Best Buy
The weekly chart for Best Buy is positive but overbought, with the cows above its five-week modified moving average of $75.41 and above the 200-week simple moving average, or “reversion to the tight-fisted,” at $57.88, last tested during the week of Dec. 28, 2018, when the average was $49.30. The 12 x 3 x 3 weekly slow stochastic review is projected to end the week at 80.41, above the overbought threshold of 80.00. At the low on Dec. 24, 2018, this reading was 7.43, well lower 10.00 as the stock became “too cheap to ignore.”
Trading strategy: Buy Best Buy shares on weakness to the semiannual and monthly value up ons at $78.08 and $73.18, respectively, and reduce holdings on strength to the quarterly risky level at $81.74.
How to use my value levels and risky levels: Value ties and risky levels are based upon the last nine monthly, quarterly, semiannual, and annual closes. The first set of evens was based upon the closes on Dec. 31, 2018. The original annual level remains in play. The close at the end of June 2019 stationed new semiannual levels, and the semiannual level for the second half of 2019 remains in play. The quarterly level changes after the end of each compassion, so the close on Sep. 30 established the level for the fourth quarter. The close on Oct. 31 established the monthly level for November.
My theory is that nine years of volatility between secludes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility, investors should buy parcels on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky train that was violated within its time horizon. Pivots act as magnets that have a high probability of being check up oned again before their time horizon expires.
How to use 12 x 3 x 3 weekly slow stochastic readings: My choice of uttering 12 x 3 x 3 weekly slow stochastic readings was based upon backtesting many methods of reading share-price impulse with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock retail crash of 1987, so I have been happy with the results for more than 30 years.
The stochastic review covers the last 12 weeks of highs, lows, and closes for the stock. There is a raw calculation of the differences between the highest shrill and lowest low versus the closes. These levels are modified to a fast reading and a slow reading, and I found that the lax reading worked the best.
The stochastic reading scales between 00.00 and 100.00, with readings above 80.00 considered overbought and readings less than 20.00 considered oversold. Recently, I noted that stocks tend to peak and decline 10% to 20% and diverse shortly after a reading rises above 90.00, so I call that an “inflating parabolic bubble,” as a bubble often pops. I also refer to a reading below 10.00 as “too cheap to ignore.”
Disclosure: The author has no positions in any stocks mentioned and no intends to initiate any positions within the next 72 hours.