The Department Store Stocks Are Cracked and Vulnerable
- Posted by Greg Harmon
- on April 15th, 2013
Last night I noted some topping candles in Macy’s, $M, often a signal of a reversal. Those candles turned out to be prescient not only for Macy’s but for the department stores in general. Now what? Well the chart for Macy’s shows that the stock is in an uptrend and has found support at the 20 day Simple Moving Average (SMA) which is nearby. There is also support from the previous high there at 42.70. The Relative Strength Index (RSI) is bullish but falling and the Moving Average Convergence Divergence indicator
(MACD) is pulling back from an extreme level on the signal line. These do indicate a pullback could continue, but until it falls below 41 it appears to be corrective and not a trend change. A second stock Saks, $SKS, exhibited the same characteristics but looks to be in a bit worse shape. The Shooting Star from Friday was confirmed lower Monday with a dramatic red candle, ending over support of the rising
channel. Volume was heavy both days and the RSI is now making a new low with the MACD turning lower. A break of the 100 and 200 day SMA at 11.00 and 10.87 respectively, would signal a trend change lower. Nordstrom, $JWN, is a third stock that fits this pattern. The long upper shadow Thursday followed by a
Spinning Top Friday confirmed lower Monday. The confluence of the SMA between 54.08-54.46 sits just below and it would take a move under those to turn bearish.
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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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