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Online Retail Strong Out of the Gate - WaveStrength Market Trends for December 18, 2006


Holiday shoppers are letting their computers do the buying more than ever this year.

by Ann Sosnowski

Holiday shoppers are letting their computers do the buying more than ever this year.

According to ComScore Networks, an Internet research firm, online sales from November 1 through to December 15 were up 25% over last year.

Contrary to popular belief that Cyber Monday (the Monday after Black Friday) is the biggest online shopping day, this past Wednesday, December 13 is already tagged as the biggest online shopping day of the 2006 holiday season. $670 million in online sales came through the wires Wednesday, which is $100 million more than the best online shopping day last year.

The number of online buyers is up 17% from last year and the average amount spent by online shoppers increased by 7%.

One of the options being taken advantage of by holiday shoppers is “buy online, pick up in-store.” It allows consumers to find the color and size of whatever product their looking for and pay for it online, eliminating wandering around the store for an hour to find the product or standing in long lines.

Then, you can pick it up at the store whenever you have free time.

Online retailer stocks are already exhibiting a buying opportunity.

Amazon.com Inc. (AMZN:NASDAQ) is currently priced at $40.00. Just coming out of oversold territory, AMZN's moving averages are providing more than adequate support, and there's plenty of room to rise on both Money Flow and RSI. The online retailer is a good buy at current prices, sustaining a rising trend it began after bottoming out in August.

Ebay Inc. (EBAY:NASDAQ) is also in a similar situation. The online marketplace's stock bottomed out in August as well and has risen 37% in less than four months. Its RSI and Money Flow are healthy and rising. Volume has begun to jump as well.

Overstock.com Inc. (OSTK:NASDAQ) is still low priced at $15.00 per share, and looks to have bottomed out at a historic 2003 point where the company's last rally occurred. OSTK is more of a risky buy, but could give speculative options traders more bang for their buck if the company announces better-than-expected earnings based on online retail projections.

Even a pop above the 200-day Moving Average on OSTK would mean a 33% jump in the stock's value.

Research firm ComScore anticipates $24 billion in online retail sales through the end of December, 5% of total holiday retail sales of $457.4 billion.

With such huge projections, it might be smart to get situated at lower prices today on some of these online retailer stocks.