Keep Your Powder Dry on Nordstrom

 | Mar 15, 2017 | 10:05 AM EDT
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Stock quotes in this article:

jwn

Nordstrom (JWN) put in a low in June last year and then rallied to make a very small double top in November/December. Prices slid $20 in the next two months and still look vulnerable to further declines, as support in the $44 to $42 area does not look all that durable.

The 1970s were a challenging time for a number of retailers (I can think of a number of names that are history) and it looks like this decade is no different. Let's visit with the latest charts and indicators.

In this daily bar chart of JWN going back to last March, above, we can see a washout low in May (notice the heavy volume of trading?). The retest of the May low in June was followed by a rally from $36 to $62. The strength to $62 did not last long and prices quickly fell back to $42 with two bearish gaps on the way down. JWM made a feeble recovery in February, but failed at the underside of the 200-day moving average line.

The $44-$42 area is support, but it is not all that significant, in that prices were not in that area all that long and the volume of trading was not that heavy. A support (or resistance) zone gains significance the longer it is in force and the heavier the volume, as both of these qualifiers suggest there could be more people that would or could defend the area again.

The On-Balance-Volume (OBV) line moved up with the price action until early December and then turned lower, signaling more aggressive selling. The Moving Average Convergence Divergence (MACD) oscillator is turning lower at the zero line for a fresh outright sell signal.

In this weekly chart of JWN, above, we have mostly bearish signals right now. Prices are below the 40-week moving average line, but the slope of the line is slightly positive. The weekly OBV line has failed to make a new high in the past four months, and the MACD oscillator on this timeframe has been bearish since January.

In this Point and Figure chart of JWN, above, we can see that JWN held twice at $42. A trade down to $41 would be a triple bottom breakout and could precipitate further declines to the mid-$30s again.

Bottom line: JWN looks vulnerable to further declines. Potential buyers of JWN should keep their powder dry.

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