Fossil May Need a Lot More Than a Fresh Battery

 | Aug 16, 2017 | 9:31 AM EDT
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Fossil Group Inc. (FOSL) has been in a multi-year downtrend. Prices were wound up to around $135 just four years ago. They have broken their 2009 nadir and are down near $8 now. Trends can, and do persist.

Can the stock recover or is this too broken to repair? Let's review the latest charts and indicators - the clock is ticking.

In this updated daily bar chart of FOSL, above, we can see the latest installment of its long decline. There is a quick price surge in November, but it is not long sustained and the downtrend resumed. By March, FOSL was making new lows for the move down.

The road lower has been punctuated by gaps to the downside in February, May and even this month. Prices are below the declining 50-day and 200-day moving average lines. The daily On-Balance-Volume (OBV) line has been declining the past 12 months, telling us that even at these price levels sellers of FOSL are more aggressive.

There was a small bullish divergence in May and June between the momentum study and the weak price action, but prices only recovered slightly in July. A larger divergence is probably going to be needed to encourage buyers.

This three-year weekly bar chart of FOSL, above, shows most of the decline for the shares of this accessory company. Prices have spent the vast majority of their time below the declining 40-week moving average line. The weekly OBV line has been bearish and the moving average convergence divergence MACD oscillator has spent nearly all its time below the zero line.

In this Point and Figure chart of FOSL, above, we can see a small part of the long decline. There is a downside price target near $5.00. The potential price target is not the point, but rather that there is no sign of accumulation or a base that is visible on this chart.

Bottom line: I have said this before, a bottom is not a point in time but rather a process. Has the low been seen? Maybe, but I doubt it. Can FOSL go lower to $5 -- it is possible. What needs to happen? Prices need to stabilize and investors need to accumulate shares which should show up in the performance of the OBV line.

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