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Electronics Retailers

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Retailers are coming under fire today after RadioShack (NYSE:RSH) reported that July sales slipped six percent. Quite frankly, I've always wondered how this chain stayed in business. If you're looking for a part to repair your 8-track player or short wave radio, RadioShack is your huckleberry, but how much sales can that generate? And what's up with asking for my phone number every time I buy something, but I digress.

Retail Index Daily Chart

Last week the Retail Index (RLX.X) desperately tried to crack resistance at 920, but finally looks to have given up. The stochastic has rolled over, flashing bearish divergence in the process, and it looks like RLX is heading to the 50-dma at 887 or the 38.2% retracement bracket at 877.

RadioShack Daily Chart

RadioShack's stock performance over the past year has been dismal, and was epitomized by the gap down on April 6th. Since then the stock has tried to mount two rallies, but each one was met with a sharp gap down, leaving the big gap from April 6th unfilled. But support at $25 has managed to hold, setting up a $10 trading range that this stock has been stuck in for the past four months.

Best Buy Daily Chart

Shares of Best Buy (NYSE:BBY) have been performing much better than RadioShack, but might be starting to top. The stock has broken its 3-month up trend, and is down $2.44 today. That puts it very close to support at $63, the 61.8% retracement bracket and 50-day moving average. This level was stiff resistance on the way up, so theory has it that it should offer solid support. If it does, a trading range between $63 and $70 looks like Best Buys' future, if it doesn't hold, a drop to $57 -$55 looks in the cards.

Jeffrey Canavan
Assistant Analyst

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