WSM is a national specialty retailer of fine qualitycooking and serving equipment, home furnishings and other home and garden accessories, marketed through 370 retail stores and 5 mail order catalogs. For the FY ended 1/28/01,net sales rose 25% to $1.83B. Net income fell 17% to $56.8M. Results reflect new store openings and an increase in comparable store sales, offset by the absence of a $4M gain on sale of assets.

May 1, 2001

Specialty home retailer Williams Sonoma continued to build on yesterday’s breakaway gap from $29.00. What’s more, today‘s move comes on volume nearly double the three-month average daily volume of 551,000. WSM has been the beneficiary of a resurging retail sector. Over the past week, the S&P Retail Index (RLX) has surged ahead 7.2 percent. At this point, WSM has made room to run higher. The stock has taken out resistance at $30 along with its upper Bollinger band at $30.56. With these resistance levels out of the way, it appears to be smooth sailing until $40. As for support, traders can look for $30 to provide the first level, followed by the 10-dma at $28.08. Traders considering a position in WSM should look for strong volume, 250,000 shares or more traded by noon EDT, on a move through today’s intra-day high of $31.40 or a bounce off support at $30.00 before placing their trades. We are placing our stop-loss just at $27.75, which is just below the 200-dma.

Picked on May 1st @ $31.10
Change since picked 0.00
Stop Loss @ $27.75

May 10, 2001

Retailers rallied strongly today thanks to a report issued by the Bank of Tokyo-Mitsubishi that U.S. chain store sales increased by a stronger-than-expected 4.4 percent pace for April. More importantly to us, though, is that WSM went along for the retailing ride, adding $1.10 to $31.15. Today’s advancement saved WSM’s MACD, which looked set to turned negative. At this point, WSM has a first level support at $30.00, followed by its 200-dma at $27.64. Resistance can be found at the recent 52-high of $32.57. Traders considering a position in WSM should look for strong volume, 250,000 shares or more traded by noon EDT, on a move through today’s intra-day high of $31.80 or a bounce off support at $30.00 before placing their trades. Before opening any new positions, keep in mind that we will be dropping WSM ahead of its earnings, which are scheduled to be released before Tuesday’s opening bell.

Picked on May 1st @ $31.10
Change since picked +0.05
Stop Loss @ $27.75

May 8, 2001

WSM succumbed to some profit taking on Monday and Tuesday. On Monday WSM lost $0.49 and today it shed another $0.65. There is not need to panic, though, because volume averaged 325,000 through both days, which is roughly 200,000 less than the three-month daily average. At this point, its possible that WSM could be stalling ahead of its earnings release on May 15. On the other hand, it could just be consolidating before attempting another move higher. We think it’s the latter. To that end, WSM’s technical indicators look favorable. The MACD and On-Balance Volume both look strong. On the downside, WSM has a first level at its 10-dma at $30.53, followed by its 200-dma at $27.64. Traders considering a position in WSM should look for strong volume, 250,000 shares or more traded by noon EDT, on a move through Friday’s close of $32.14 or a bounce off support at $30.53 before placing their trades.

Picked on May 1st @ $31.10
Change since picked +0.27
Stop Loss @ $27.75

May 6, 2001

After erasing three days of gains in the first 30 minutes of trading on Friday, WSM moved steadily higher for the rest of the session, to close up $0.65 on good volume of 690,000 shares. This is a good sign that buyers are coming in on the dips. In addition, the 50-dma is just about to cross up through the 200-dma, which is usually a very bullish sign. We also like the fact that WSM’s technical indicators are firing on all cylinders. The OBV is almost at yearly highs and the MACD is still decidedly positive. The RSI and stochastic, however, are both issuing an overbought condition, but then again, they have been saying this for a few weeks and WSM keeps on adding to its gains. A slight pullback might be in the cards early on next week, but this might give traders a chance to add to positions. We are looking for additional entry points on a pullback to the 5-dma at $31.44. Our stops remain at $27.75, but may be raised soon if WSM keeps on its northerly course. Picked on May 1st @ $31.10 Change since picked +1.41 Stop Loss @ $27.75