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This column was originally published on RealMoney on Aug. 16 at 11:30 a.m. EDT. It's being republished as a bonus for readers.

I examined

the retail sector on Monday, listing reasons why this group will be trading at discount prices in the weeks ahead.

But a handful of retailers are bucking the downtrend. Today I'll highlight these issues so readers can get a leg up on the competition.

China, oil and interest rates will affect retail sales as we head toward the holidays. Finding group leaders during this period should provide two benefits.

First, it shows us where to park our capital when other retailers break down. Second, these issues should outperform on the upside when other components finally recover.

Here's a watch list of seven retail stocks that show strong accumulation and/or price patterns despite the sector downturn.

Note that most of them aren't in the best buying positions right now, so be patient and wait for entry signals.

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Office Depot

(ODP) - Get ODP Corporation Report

gapped up to an all-time high in late July and has been moving sideways since then.

The small congestion pattern looks like a mini cup-and-handle, with resistance just over $29.

A breakout above this level should carry the stock into the mid-$30s by the middle of the fourth quarter.

Children's Place

(PLCE) - Get Children's Place, Inc. Report

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trades like a tech stock despite its benign name. Volatility has kicked up a notch since it tagged its all-time high in the lower $50s last June.

The correction since that time has shaken out traders and investors, but the stock has held its price very well.

Watch for the next rally over $50 to set a fresh breakout into motion.

Office Depot

Children's Place

Stein Mart

Stein Mart

(SMRT) - Get SmartRent Inc Class A Report

sold off from $26 to $20 in a deep correction following its May breakout gap. It bounced above the 200-day moving average recently and should move higher once it bases near current price levels. Accumulation has remained strong through the three-month pullback, so the recovery toward the highs should attract wide interest.

Best Buy

Best Buy

(BBY) - Get Best Buy Co., Inc. Report

has been a top retail performer this year. It broke out to an all-time high in June and reached $53 before starting to pull back about three weeks ago. That decline reversed above the 50-day moving average last week. Any pullback here should mark a good opportunity to build a position for a recovery above the recent high.

Circuit City

Circuit City

(CC) - Get Chemours Co. Report

has been riding Best Buy's coattails, but this stock shows far less volatility. It broke out to a four-year high in May and hit $18.71 before starting to pull back. Price has been bouncing along the 50-day moving average for the last few bars and should jump back to the highs soon, as long as it continues to hold current levels.

Coldwater Creek

Coldwater Creek


is a volatile catalog company that's been moving steadily higher for the last 2 1/2 years. It reached $29.38 on its latest rally leg and then dropped back a few points to test support. The stock could take another leg down and test the 50-day moving average under $25 before stabilizing for a run on the highs.


You can't tell there's a retail correction by looking at



. The stock keeps moving higher, pausing only for brief pullbacks to its 20-day moving average. This methodical rally began in June, after the stock broke out above multiyear resistance. It looks like this move will find smooth sailing until price reaches over $50.

P.S. from Editor-in-Chief, Dave Morrow:

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Alan Farley is a professional trader and author of

The Master Swing Trader

. Farley also runs a Web site called, 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;

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