The Best Stock to Buy Before Christmas

The so-called "experts" needed to see the consumer confidence level reach a nine-year high before they said that people are feeling pretty good about spending their money.

But let's be honest...

It's the holiday season, and we're only two weeks out from Christmas. Of course everyone is shopping!

So instead of wasting your time listening to these pundits analyze pointless fundamentals, take advantage of what the price patterns reveal.

And treat your portfolio to the most lucrative "Christmas stock" there...

Trading "Nordys" Before Christmas Could Deliver Profits for the Next Three Months

gifts-stocks-upBack in September, I introduced you to a bit of an "unusual" trading methodology, compliments of William O'Neil: buy high and sell higher.

Now, you may be thinking that trading a stock at its 52-week high is the same as "chasing prices"... It's not. While it's true that stocks moving higher in price may come down - they don't necessarily come all the way back down. And as investors keep accumulating that company's stock to capture those profits, the stock price gets pushed higher and higher (even after a pullback). In fact, stocks trading at 52-week highs have made investors so much money that they're considered to be "the darlings" of the markets.

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And the price pattern I'm about to show you is no different...

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In this case, Nordstrom Inc. (NYSE: JWN) has ramped higher since President-elect Trump's win, but pulled back to a support level. Now it's moving to all-new highs:

PPT1

As you can see, Dec. 9 marks JWN's 52-week high. But let's zoom in on the time frame between August and now:

PPT2

JWN had broken out above a resistance area in the $55 price range and continued advancing higher. Then it pulled back to and held at that $55 price level before moving higher. This resulted in the formation of what we've talked about before, "old resistance, becoming new support." So as a technical trader, one thing you can do to determine the stock price in the future is take its prior upward move, called a "leg," and apply that same price move to the next leg higher.

The nice thing about this "Christmas pattern" on JWN is that you can assess a technical stop-loss point as well. That would be the pivot low from which this new leg higher is expected to take place. So you could consider a close below $55 as your stop-loss target.

Next, you'll want to take the difference between the low to high of the prior leg to determine JWN's next price movement. Remember, the low of the leg is at around $55, and the peak is around $60, making the length of that leg 15 points. When you add those 15 points to the $55 price, you get a target of $70, which sets you up for the perfect profit opportunity.

But I'm not talking about getting in and out before Christmas... The historical price movement isn't robust enough to be worth your time and money. I'm talking about taking advantage of JWN's 52-week highs now and stretching your profits over the next two to three months...

The days leading up to Christmas just don't give JWN enough time to make a healthy enough profit. The 15-point move took about a month... but you not only want to look at the price movement to mirror itself - you also want to look at the time frame for that move to take place in a mirrored fashion.

That's why JWN is not just the best stock to buy before Dec. 25 - it's also the best "Christmas stock" that could give you profits up to three months after. And with it living in a sector that's already capitalized on Trump's win - with even more gains to follow come Inauguration Day, this momentum will continue without a retracement needing to take place first.

Good trading and happy holidays!

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About the Author

Tom Gentile, options trading specialist for Money Map Press, is widely known as America's No. 1 Pattern Trader thanks to his nearly 30 years of experience spotting lucrative patterns in options trading. Tom has taught over 300,000 traders his option trading secrets in a variety of settings, including seminars and workshops. He's also a bestselling author of eight books and training courses.

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