I hope everyone enjoyed a few days off, as I did, and that Santa brought you what you wanted.
In keeping with the holiday shopping theme, today we will discuss the chart of Best Buy (BBY), as it made a new high for 2014 last week.
Best Buy had triggered a long-term overbought condition in November and fell by more than 11% from the Nov. 28 high at $39.79 and the Dec. 8 low at $35.25.
Best Buy did not give us the same long-term overbought condition this time, even though it traded to a higher high at $40.04 on Dec. 23.
With the stock closing back below the Nov. 28 high at $39.79 after making a higher high, I am looking for Best Buy to give us a tradable pullback here.
Let's take a look back at how the stock traded in November 2013.
The Nov. 13, 2013 high for BBY was at $40.66 and shares fell by more than 20% by Jan. 14, 2014 at $35.67.
Then on Jan. 16, BBY gapped down another 31% for the day and finally bottomed at $22.15 on Jan. 31.
BBY did generate a long-term oversold signal on Jan. 31 and rallied by 45% from the $22.15 low to the July 3 high at $32.24.
The rally then stalled with the 200-day moving average at $32.17 and a long-term overbought condition triggered.
If shorting BBY here, then you can use a close above $40.03 as a short-term cover. A close below $37.38 and look to press the sales.
The next downside target would be the rising 50-day moving average, currently at $35.77.
I will follow up next week and into 2015.
At the time of publication, Berman had no positions in any of the securities mentioned.