Maybe blogging about food and cooking -- and posting your latest meal on Facebook -- has peaked. How about trying to look like a trained chef at home without spending two years at the Culinary Institute of America? Watch out Food Channel, your knife skills maybe be getting dull. After a huge run from its late 2008 low, shares of Williams-Sonoma (WSM) peaked in August last year and have yet to establish a good price bottom that can support a new uptrend.
WSM, chart above, turned down sharply at the end of August, breaking below the 50-day and 200-day moving averages. In October, the 50-day average line crossed below the slower, 200-day line, generating what is commonly called a death cross -- yes it is a negative signal.
Read today's coverage of WSM by columnist Chris Laudani here.
Coming down from a zenith near $90, prices found a little stability around $50 in January and February, but volume has not increased. The old Wall Street adage is that volume is the weapon of the bulls. The On-Balance-Volume (OBV) line is "flat as a pancake," failing to signal any aggressive buying. The recent higher price high for WSM was made on a weaker momentum reading. It is a bearish divergence when prices make higher highs but the indicator doesn't. This kind of price action can result in a decline back below $55 for WSM.
This longer-term chart of WSM, above, shows prices well below the declining, 40-week moving average. It is interesting to point out that after the August breakdown, WSM had a number of rally failures to the underside of the 40-week average. On this weekly time frame, the OBV line has a minor uptick, but the momentum study does not reveal any divergences. Short-term and long-term, WSM doesn't seem to have the recipe for a bottom formation just yet. More sideways price action, or even a decline to a new low, may be needed to turn things around on the charts.