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Best Buy’s plunge is no shock: It reconfigured its stores to sell small electronics at break-even prices to lure in flat-screen TV buyers whose wallets were overflowing with housing re-fi money.
The common adage about housing is that it has a solid bottom because “folks gotta live somewhere.” However, somewhere’s living room does not necessarily need a brand-new 52-inch plasma screen.
Now that the banks have ceased to dole out free money, Best Buy can still sell $36.9 billion a year in car stereos, DVD players and patch cables, but can’t scrape together two nickels in profit doing it.
Price-wise, BBY’s tactical failure has put it on the wrong side of every market move: BBY shares lose ground when the blue chips collapse, and lose more when everyone else is recovering.
I forecast that price will move below critical support at $41.29 within the next five weeks. After that, it is a free-fall through the end of the year, with $29.81 not out of the question at all.
These double-digit losses can be converted into triple-digit gains via deployment of mid-dated BBY put option contracts.
Adam Lass
Market Analyst, WaveStrength Options Weekly
How’s This for Amazing Gains?
FDX October 100 Puts……122.22%
XLE January 55 Calls……..125.00%
PFE January 27.5 Puts……..221.21%
AIG January 65 Calls………215.38%
DOW June 40 Calls………..167.80%
TGT January 50 Calls……..131.91%
WY April 2007 65 Calls……456.76%
CAT November 65 Puts…….215.00%
DuPont April 47.5 Calls……127.12%
Average 77.5% Per Play Without Risking One Red Cent… Or Your Membership Is On Us. In Fact, Committing 10 Minutes Per Week to This System Could Make You $88,750 Richer.
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