Macy's Stock Is Looking for Support

 | Mar 15, 2017 | 9:00 AM EDT
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Can Macy's (M) survive? Will someone acquire the company? Will the fireworks happen in New York again this July? These questions keep me up at night.

Not really, but today I want to look at Macy's, the stock with the iconic single letter symbol "M", and see if it will hold or break nearby support.

In this daily chart of M, above, we can see the price action going back for the past 12 months. M had a tradeable rally from May into late November and then it fell apart. In about six weeks or so, the down draft erased six months of gains. About two thirds of the way down, the stock gaped to the downside as if the pace of the selloff wasn't fast enough. Prices finally stabilized around $30 or so before a recovery filled part of the overhead gap.

A bearish death cross of the declining 50-day moving average line and the declining 200-day moving average line can be seen in early February. The On-Balance-Volume (OBV) line shows some modest improvement in February, but appears to be rolling over again this month. The performance of the OBV line is not giving us much confidence in the strength or the durability of the stock. The Moving Average Convergence Divergence (MACD) oscillator in the lower panel is below the zero line again, for a fresh outright sell signal.

This three-year weekly chart of M, above, shows how the stock has struggled. Prices were cut in half in late 2015. There is a recovery in early 2016, but prices sink to a new low and that pattern is repeated again, with new lows this year. M is trading below the declining 40-week moving average line, so we know the major trend is still down.

The weekly OBV line shows a steep decline this year, suggesting that sellers of the stock have been pretty aggressive, with heavier volume seen during the weeks that the stock has closed lower. The weekly MACD oscillator moved to an outright sell signal at the beginning of 2017.

This Point and Figure chart of M, above, focuses just on price and filters out smaller jiggles or noise of less than $1. M has held twice at $29 and is currently in a down column this month (notice the 3 for March and the Os?). If M breaks to $28, it will open up the possibility (not the certainty) of a further decline, with a price target of $14.

Bottom line: can M bounce here? Sure, why not, but the trend of the past three years is down, and I would give greater odds that the $29 support zone breaks.

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