L Brands Inc. (LB) was last covered way back in August and we wrote, "LB has been in a long-term downtrend and there are no strong signs that it has ended yet. This is probably not the time to try to pick a bottom." This turned out not to be our finest hour as August turned out to be the bottom and LB rallied from near $35 to over $60 by the end of the year.
In this daily bar chart of LB, below, we can see two price gaps or price voids on the chart. One in early January and another gap today. In January prices gapped below the cresting 50-day moving average line and today prices gapped below the declining 200-day line.
The On-Balance-Volume (OBV) line followed prices up from August to December to confirm the rally, and since the beginning of 2018 the OBV line has signaled more aggressive selling. The pace of the decline this year has slowed, looking at the momentum study, but that does not mean we cannot decline further.
In this weekly bar chart of LB, below, we can see that today's weakness will put LB back below its 40-week moving average line. This chart suggests we could retest the 2017 low and maybe make a double bottom pattern. The weekly OBV line is interesting in that it was rising over the past two months when prices were weak. This could mean that someone was a buyer on the weakness and they now have a loss on their hands.
The weekly Moving Average Convergence Divergence (MACD) oscillator is just above the zero line and could soon cross the line for a sell signal.
In this Point and Figure chart of LB, below, we do not show the gaps and prices show a new low for the move down. A bearish price target around $37 is shown.
Bottom line: LB is likely to push further into the $45-$40 area and maybe lower in the days and weeks ahead.