Lowe's Cos. (LOW) was reviewed way back in November when I wrote "The long side of LOW looks appealing. Traders and investors could go long above $83 and add on strength above $86. Our price target is $104 and a close below $75 would weaken the charts."
Today we can see that LOW rallied to our $104 price target and a bit more. If traders took profits on that rapid advance and overshoot I tip my hat to them. Prices have declined back to $95 in recent days so we have to ask what is next? Let's check the charts and indicators.
In this daily bar chart of LOW, below, we can see that prices have declined nearly $15 in a short period of time. LOW is still above the rising 50-day moving average but that average could be tested in the coming week. The rising 200-day moving average line is still well below the market.
The On-Balance-Volume (OBV) line rose with the price advance from July to the middle of January. The line has weakened the past three weeks and suggests that sellers have become more aggressive. In the lower panel the 12-day price momentum study has negative readings now but we do not have a bullish divergence to suggest that the decline is slowing.
In this three-year weekly bar chart of LOW, below, we can see that prices are well above the rising 40-week moving average line. The weekly OBV line has been moving up since August but has turned a little lower in the past two weeks. The weekly Moving Average Convergence Divergence (MACD) oscillator is still pointed up but the two moving averages of this indicator have begun to narrow.
In this Point and Figure chart of LOW, below, we can see a possible downside price target of $82. That might be too bearish of a forecast but a decline to $94.55 is likely to generate further weakness.
Bottom line: LOW is weakening and it could test and break the 50-day average line. Prices could decline to around $90 before buyers return.