Buckle Up for Ride Higher
- Posted by Greg Harmon
- on October 14th, 2013
Buckle, $BKE, took a header after reporting weak retail sales last week. To be fair, the teen and tween retail space has been very fickle and anyone that one’s one of these (teens or tweens) can understand why. The stock sold off about 10% on volume that had not been seen since June 2012. This makes your mind wander to thoughts of capitulation, and a rebound. The chart shows that the Relative Strength Index (RSI) fell to 20 and the price moved below the 200 day Simple Moving Average (SMA) for the first time this year, finishing outside of the Bollinger bands. It is not enough for the price to move demonstrably lower in one day on large volume and to extremes to warrant a turn around though. Preparing for one
is prudent but pulling the trigger can lead to a big loss. The set up over the next two days, Friday and Monday is positive for a rebound, printing back to back Hammer reversal candles. The second has confirmed the first higher as well. A move back over the 48 level Tuesday can now be played to the upside against a stop just under 47. Remember, it does not have to bounce. It cannot correct for all the oversold indicators through time moving sideways as well. Don’t trade it without the stop and keep an eye on it.
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Gregory W. Harmon CMT, CFA, has traded since 1986 and held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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