This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Eight Retailers Look Right for Holidays

This column was originally published on RealMoney on Nov. 15 at 11:59 a.m. EST. It's being republished as a bonus for TheStreet.com readers.

On Monday , I examined the retail sector and its mixed holiday prospects.

Today, let's continue the discussion and identify stocks to trade as we head into the most important time of the year for America's shopping malls.

Expect a stock-picker's market in the sector as we approach year's end, rather than a raging bull market.

It's late in the economic cycle and consumers will need good reasons to open their wallets during the holiday season.

In this type of environment, careful selection should pay off; throwing money at these stocks could be a disaster.

I'd also stick with the group leaders for now.

These stocks have risen to the top for good reasons and should continue to outperform through the holidays.

In other words, you'll do better buying lofty highs than chasing basement bargains.

Here's my watch list of the eight strongest stocks I could find in the group.

Notice how some look ready to enter right now, while others should be watched closely until key price pivots are hit.

Conn's (CONN) is a fairly new issue, having come public in early 2004.

It's been in a steady uptrend since that time.

The stock broke out to its latest high two weeks ago, after a six-week consolidation near $29.

It's now congesting in a tight triangle pattern that may set up strong follow-through into the upper $30s.


Too (TOO) printed a major top at $30.64 in 2002. The stock has been approaching this key level in a rising parallel channel for the last three months. Price finally reached up and tagged this old high on Friday. Look for another downdraft here and then a sharp move that carries the stock to a new multiyear high.

Jos. A. Bank Clothiers (JOSB) shows up on everyone's top 10 list. This isn't a surprise because the stock has been on a tear in 2005, rising more than 60%. The latest leg of its rally stalled in July, when the entire sector sold off. Price stabilized after a correction and is now testing the summer high. Watch for a consolidation at current levels that sets up a major breakout.

Nordstrom (JWN) stalled out in August after a strong rally. It pulled back sharply and then charged back to the high one month later. That test failed and the stock sold off to the 200-day moving average. Price recovered once again and returned to summer resistance last week. Monday's classic triple-top breakout could start an extended run.

Claire's Stores (CLE) gapped through its all-time high earlier this month after reporting strong monthly sales. The stock now is congesting above this key level and could move sharply higher in the weeks ahead. One caution: The company reports earnings on Thursday. Smart traders will stand aside until this major news event passes.

Dress Barn (DBRN) charged above its summer high two weeks ago, reaching $29.37 before starting to pull back. This correction looks like a developing bull flag pattern that eventually will offer a low-risk trade entry. The best plan is to put this issue on your watch list and enter on a rally above the two November highs.

Chico's (CHS) has been grinding higher in a steady uptrend for nine years. My wife attributes this outstanding performance to their quality clothing. In any case, the stock gapped up to a new high last week and pulled back immediately. It could start a strong run into the $50s once it trades over the recent peak at $44.76.

Long Drugs (LDG) rallied through its 1998 high in July and rolled over in a mild correction. It found support at $40 and started a bounce toward resistance several weeks ago. Notice how the stock has set up a basing pattern at the old high. A push over this level should trigger a quick move to the July peak. In turn, this could yield a strong breakout over nine-year resistance.

P.S. from TheStreet.com Editor-in-Chief, Dave Morrow:
It's always been my opinion that it pays to have more -- not fewer -- expert market views and analyses when you're making investing or trading decisions. That's why I recommend you take advantage of our free trial offer to TheStreet.com RealMoney premium Web site, where you'll get in-depth commentary and money-making strategies from over 50 Wall Street pros, including Jim Cramer. Take my advice -- try it now.

Alan Farley is a professional trader and author of The Master Swing Trader. Farley also runs a Web site called HardRightEdge.com, an online resource for trading education, technical analysis and short-term investment strategies. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Farley appreciates your feedback; click here to send him an email. Also, click here to sign up for Farley's premium subscription product The Daily Swing Trade brought to you exclusively by TheStreet.com.

TheStreet.com has a revenue-sharing relationship with Amazon.com under which it receives a portion of the revenue from Amazon purchases by customers directed there from TheStreet.com.

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,987.51 -61.49 -0.36%
S&P 500 1,985.54 -11.91 -0.60%
NASDAQ 4,567.5980 -24.2080 -0.53%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs