Best Buy Rallied. Here’s the Pullback

Electronics chain Best Buy has been working hard not to become a dinosaur in the retail ecosystem. Following the model of larger rivals like Wal-Mart Stores and Target, BBY has used new services like product support and in-store pickup to keep shoppers in its locations.

The change worked last quarter, driving the stock decisively above $78 for the first time in more than a year. It’s now pulled back and retraced more than half that rally. Still, old resistance could be turning into support as BBY holds $78.

Like IWM yesterday, this level could provide an interesting risk/reward if traders are disciplined enough to cut losses below it. Above $78, trend followers may look to accumulate the retailer – especially with management optimistic about the holidays and new gadgets coming next year.