Nordstrom: Weakness in Seattle

 | May 17, 2017 | 9:55 AM EDT
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Stock quotes in this article:

jwn

Nordstrom  (JWN) broke the lows of February and March yesterday. Unless prices quickly reverse to the upside, further losses and a test of older support in the $38-$36 area looks likely in the next few weeks. Failure to hold the $38-$36 support zone opens up the possibility of a deeper decline to the $32 area.

In this daily bar chart of JWN, below, we have a weak looking chart and no bullish divergences yet to suggest that the pace of the decline has slowed. Earlier this month JWN was above the rising 50-day moving average line and even got above the rising 200-day moving average line for a few days, but this strength did not last long. Last week prices fell sharply breaking back below the 50-day average line and gaping lower. Yesterday prices closed below their March lows to refresh the downtrend from December. 

The daily On-Balance-Volume (OBV) turned lower in December and is still weak telling us that sellers of JWN have been more aggressive. In the lower panel is the 12-day momentum study, which shows us the rate of acceleration and there is no bullish divergence between the price action and the momentum indicator. A bullish divergence would tell us that the pace of the decline was slowing.

In the weekly bar chart of JWN, below, we can see the damage of the past three years. JWN is below the 40-week moving average line and the slope of the line looks to be turning down again. The weekly OBV line has been making lower highs since November and the Moving Average Convergence Divergence (MACD) oscillator is in a bearish setup below the zero line.

In this Point and Figure chart of JWN, below, we can see that a trade at $40.00 will break the "double bottom" at $41 and open the way for further declines to $32.

Bottom line: The bear has control of the price action for now. At some point investors motivated by things other than price and trend will be attracted to JWN. Unfortunately I do not think that point has arrived yet.

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