BBY Watch

The electronics retailer Best Buy Inc. (BBY) shows a parabolic sar bull signal on a price increase that has brought it to just below the 20-day moving average and around 8% above the recent low.

	trend	adx	psar	pps	macd	macd trend	sto	sto trend
BBY $44.61

At 2:44 p.m. Eastern

This stock forces the trader to focus on the concept of "trend". We all know that an uptrend is a series of higher highs and higher lows. But when is the present uptrend considered to be with the larger trend, and when is it countertrend?

A tough call in this case.

BBY began an upward swing in February that peaked in late April. The stock in recent years has mainly been a sidewinder, and the swing could be seen a slight overshoot of what is essentially a non-trending pattern.

In that case, the present upswing that began on May 6 can be seen leading to a retest of a firm upward bound.

However, a closer focus shows a high of $48.83, and then a higher low of $39 that has been reversed.

Several ways to play this.

The prudent will wait for either a close above $48.83, and then enter with a directional bull play, or, if the price hits $48.83 and then retreats, will enter a direcitional bear play to catch the downward oscillation.

Traders more comfortable with risk will take a directional bull play now to capture the 9% gain until serious resistance at the swing high, and then decide at that point whether to reverse to a bear play and to keep riding upward.

Reversal Levels

• $48.83, +9.5%
• $45.17, +1.3%
• $44.61 <==You are here.
  
• $39.00, -12.6%
• $35.01, -21.5%

---

The Investor's Guide to Active Asset Allocation: Using Technical Analysis and ETFs to Trade the Markets
Martin Pring's detailed deconstruction of the economic cycle: What sorts stocks to look for at each stage of the recovery. A masterful analysis.

---

Skynet Panic of May 6 Panic Looks Like This Skynet Panic Poisons Technical Tools Abbreviations: psar - Parabolic Stop and Reverse adx - Average Directional Index pps - Person's Proprietary Signal ma20 - 20-day moving average macd - Moving Average Convergence-Divergence mfi - Money Flow Index sto - Fast Stochastic About the glance: The colors indicate the state of each signal.

• trend: Determined by the 5-day moving average, green for up, red for down, yellow for sideways
• adx: orange for above 30-up, blue for 20-down, purple for in the middle. Red is most prone to whipsaws
• psar, pps, macd: green for bull mode, red for bear
• sto: green for overbought, red for oversold, yellow for the neutral zone.

New to Private Trader? Check out the Reader's Guide.

New to private trading? Here's a look at How to Become a Private Trader.