How to Trade the 2018 Holiday Season, Part II


Most of us are well aware of the seasonal trading patterns around the holidays.

Most of us are also well aware that companies whose sales and profits ramp up in the holiday season are great stocks to buy for a short-term run-up.

Last Saturday, we spoke about three hot ways to trade the holiday season.

Since then, Weight Watchers (WTW) has run from $48.50 to $50.56.

FedEx (FDX) ran from $224 to $231.85.  And Best Buy (BBY) ran from $64 to $65.60.

But there’s one more we need to add to that list that’s already begun to run higher.

Target also has a history of running higher in the holiday months.

In fact, in three of the last four holiday seasons, the stock accelerated higher.  Now that’s it’s become oversold on earnings, it could very well accelerate higher yet again. Plus, technically, it’s the most oversold it’s been in quite some time.  It’s at its lower Bollinger Band (2,20).  And RSI, MACD and Williams’ %R are all deep in oversold territory.

While it struggled with earnings in the last quarter, missing on revenue by $110 million, same store sales and traffic still continue to grow. Its online business is growing, too.  In fact, its 49% online growth was faster than the 41% growth in the second quarter.

A Seasonal Strategy Just Makes Sense

If you see that a particular stock has run up year after year, it’s a great indicator that you may want to buy a stock like Best Buy, or FedEx before a big seasonal move higher.

Other than the holidays, we can trade stocks on the winter patterns, too.

During the winter, for instance, demand for coffee and tea often increases, which can have an effect on stocks like Starbucks (SBUX).  We can even look to businesses like Home Depot (HD) that sell snow shovels and heaters. Or, even a tock like VF Corporation, which owns The North Face and its warm coats.


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