Sucky Retailer of the Day

The trade in Sears that I talked about on December 28th  worked out just as expected. 

It was purchased on December 29th at $9 after breaking it's downtrend line and sold at $11 this morning when it hit its price target.  It's proof that you can make money trading retailers that suck.

 

Macy's sucks as well and I think there are similar dynamics playing out that could lead to another profitable trade. 

I like to look for trades when stocks are down or up large amounts in short periods of time and are approaching what were important support or resistance levels in the past.  That was the case with Sears, and that is the case today with Macy's.

Macy's is down -15% today on an earnings miss and down -35% since the end of November.  It is also getting close to $30...which is where it found support last May and just below where it found support throughout the Summer. 

A possible trading strategy is to try to buy it on the way up if it rebounds.  That's the key...wait for it to go up before buying it.  Don't try to catch the exact bottom.  Sure...you wont get as good of a price but if it doesn't rebound but if it breaks the support that's at $30, you could get run over and have a big loss.

It's currently trading around $30.70.  I would consider buying it if it gets back up to $31.50.  That's around where it opened today.  My initial stop-out would be at $30 and then if it rallies I'd move this up.  My target would be $35 because that was a support level in September and October so it should probably become a resistance level now.

 

 

After several failed retail ventures, Rowland Hussey Macy’s determination and ingenuity paid off at the age of 36 with the launch of R.H. Macy & Co. He adopted a red star as his symbol of success, dating back to his days as a sailor. First-day sales totaled $11.06 but by the end of the first full year, sales grossed approximately $85,000. By 1877, R.H. Macy & Co. had become a full-fledged department store occupying the ground space of 11 adjacent buildings.