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Tickers in this Article: BBY, WMT, M, JCP, GPS, ROST, AMZN
Thanksgiving week has become the highest profile week for retail chains as Black Friday sales have exploded in popularity. The coming weekend has always been important, as it sets the tone for the holiday shopping season. As such, it's interesting to take a look at some retail names heading into the weekend. While some chains like Best Buy Co. Inc. (NYSE:BBY) and Wal-Mart Stores Inc. (NYSE:WMT) seem to be in pretty good shape as they trade at or near 52-week highs, there are some other chains that are at critical levels.

Macy's Inc. (NYSE:M) may be the highest profile retailer of the holiday season as sponsors of the famous Thanksgiving Parade. Macy's has performed quite well this year; it recovered from single-digit stock prices during last year's holiday season, and was able set several successive higher highs as it rallied into its October high above $20. However, given the last pullback, the end result is that Macy's has been basically trading sideways for a few months despite the higher high. It is currently testing a critical support level and has formed a possible head-and-shoulders pattern. A break below $16.80 could send Macy's into a much deeper correction.

Source: StockCharts.com

J.C. Penney Company Inc. (NYSE:JCP) is another retail stock that is testing a critical level as it approaches the most important shopping season of the year. JCP was looking very strong as it cleared a base in October and surged to new highs. Unfortunately, the breakout was very short lived, and JCP quickly fell back below prior resistance. It is now all the way back toward the bottom of its prior trading range. The $28.50 range marked the prior important low and is a critical level for JCP. (For related reading, check out The Anatomy Of Trading Breakouts.)

Source: StockCharts.com

Gap Inc. (NYSE:GPS) is another retailer that has backed away from recent highs, although it is not quite at a critical level yet. GPS broke out into a new rally in August, and has been consistently pressing higher for a few months. The pullback from the October high has not been too severe, and GPS remains in a trading range. However, there are a few subtle clues that hint at a possible breakdown, including the fact that GPS recently set a lower high at $23.15 and then broke under its 50-day moving average. With GPS at the bottom of the recently established trading range, whether it can hold this level remains to be seen. A failure here could lead to a test of much lower levels. If it holds, which is still very feasible, the level to watch is the top of the range and the prior high near $23.36.

Source: StockCharts.com

While the chart for Ross Stores, Inc. (Nasdaq:ROST) is not as clear cut as the others, it is showing many of the same patterns. ROST was rallying along with the group heading into October, and it had a gap up peak high near $50.50. This breakout failed miserably, and ROST gave it all back in a day and followed through with a move under the prior base just a day later. ROST has been grinding sideways since that breakout failure and appears to have established a base just under the prior one. It has attempted to rebound above $47 twice and was met with selling both times. It has also failed to hold above its 50-day moving average this entire time, and just last week fell to the bottom of its new range. ROST is at a critical area here as it is threatening to fall back toward its 200-day moving average and prior base near $40.

Source: StockCharts.com
Bottom Line
While many of these stocks are at critical levels, most have not yet broken down. It will be interesting to see if they can hold support levels here as they approach the holiday trading season, or if the recent weakness is pricing in a soft holiday season for these chains. One thing is probably certain though: if weakness sets into the leaders such as Best Buy Co. Inc. (NYSE:BBY) or Amazon.com Inc. (Nasdaq:AMZN), these names will probably fail to hold these critical areas. Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.

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