Starting today, Black Friday, consumers will be spending more time in retail stores as the holiday shopping season kicks into full gear. Concerns about a possible recession in 2023 have had a negative impact on the retail sector, but a few names have been surprisingly strong of late.
Let's take a look at three of the best charts in the retail sector right now.
Almost one year ago to the day, Best Buy (BBY) closed at an all-time high of $138. Since then, shares of the electronic retail giant have fallen by 40%.
On Tuesday, Best Buy gapped higher after the company's third-quarter earnings beat analysts' forecasts. Those forecasts had been reduced earlier due to fears of consumers balking at higher prices.
As a result of the solid earnings report, Best Buy popped 10% higher on nearly six times its normal volume (arrow). The dramatic increase in turnover is a sign that institutions are loading up on the stock.
Source of charts: TradeStation
On Wednesday, Best Buy did something it hadn't been able to do all year. The stock closed above its 200-day moving average (red) for the first time this year. Despite its recent rally and breakout, Best Buy remains 40% below its all-time high, set last November.
Best Buy also has formed a bullish double bottom pattern (black curved lines). That formation projects the stock to the $100 area, making that figure our target price for Best Buy.
BJ's Wholesale Club
In a year in which the S&P Retail SPDR ETF (XRT) has lost 26.2%, one of its components, BJ's Wholesale Club (BJ) , dramatically has outperformed its benchmark, gaining 9%. In August, I explained why BJ's is immune to the negative effects of a strong U.S. dollar.
Last week, BJ's beat third-quarter earnings projections and raised its fiscal 2022 outlook. Although the stock fell slightly after the earnings report, BJ's remains firmly in a bullish trend.
Shares of Walmart (WMT) have been quiet for the past two years, gaining just 0.3% in 2021 and rising just 5.34% year to date. However, the world's largest retailer has been on a tear in recent days, gaining 10% since the Nov. 14 close of $138.
Walmart's 50-day (blue) and 200-day (red) moving averages formed a golden cross on Nov. 17. That bullish signal occurs when a stock's 50-day MA crosses above its rising 200-day MA.
Walmart appears ready to make a run at its all-time high of $159. The retailer's emphasis on low prices will give it an advantage over its competitors in a potentially recessionary environment in 2023.