Why Best Buy Could Move Lower
Wally Olopade was recently a guest on #PreMarket Prep, a daily trading idea radio show hosted by Joel Elconin and Dennis Dick
Best Buy Co Inc (NYSE: BBY) has rallied 22 percent in the past month, while the S&P 500 declined 1.6 percent.
Right Side Trading Senior Instructor Wally Olopade said that since the stock hit resistance at $39, his firm initiated a short looking for Best Buy to fall further.
Olopade said that he first saw weakness via a bearish engulfing pattern in Best Buy's candlestick chart.
Best Buy rallied in late August following a strong Q2 earnings report. The company reported EPS of $0.40 versus expectations of $0.34 on stronger revenues. That saw the stock trade from below $30 to near $39 per share.
Olopade said that as the stock reached $39 per share, it started showing weakness. Olopade noticed that via a bearish engulfing pattern in Best Buy's candlestick chart. That is a "huge" flag, Olopade noted.
Further, the price action confirmed that bearish pattern with a move lower. Olopade noted that he is now looking for a "big plunge to the downside," particularly if the overall market begins to decline as Olopade expects it will.
See more from Benzinga
© 2015 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
