We looked at JB Hi-Fi (JBH) last year and didn’t like the way the chart looked. We expected the shares to fall towards support near $22. Since our note, Amazon has been in the papers nearly every day and investors headed for the exit. The stock is now down over 15% since our warning. In comparison, the ASX200 has climbed higher and higher during that time. With the stock hitting our downside target, is it time to go against the Amazon hysteria and step back into JB Hi-Fi?

Two weeks ago we saw it trade intraday at $21.92. Now we have seen JB Hi-Fi bounce from that level. This area sees JB Hi-Fi trade on trendline support and it is also the 38.2% retracement of the 2012 – 2016 rally. JB Hi-Fi should continue to head higher from here, but downside risks remain.

Any potential trade here is not for the faint-hearted. We would look to put a stop near $21. If JBH can turn higher here, then expect resistance to come in near $25.50 and then up at $27.50.

Michael Gable is managing director of Fairmont Equities.

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