The charts and indicators of L Brands (LB) were reviewed at the beginning of the month, and I gave it a bearish spin, "LB is likely to push further into the $45-$40 area and maybe lower in the days and weeks ahead." Two weeks later and LB is moving below the $40 bottom end. Can we see a retest of the August/September lows in the weeks ahead? Let's check.
In this updated daily bar chart of LB, below, we can see that prices continue to decline from their late December high. Prices are below the declining 50-day and the declining 200-day moving average lines. The 50-day average could soon cross below the 200-day average for a "dead cross." This trend-following signal is typically late but can be effective on longer-term moves to the downside. The daily On-Balance-Volume (OBV) line continues to work lower from its late December high and tells us that sellers of LB have been more aggressive. The 12-day momentum study is not showing us a bullish divergence so further weakness is anticipated.
In this weekly bar chart of LB, below, we can see that prices are below the 40-week moving average line and its slope is bearish. The weekly OBV line is weakening and the trend-following Moving Average Convergence Divergence (MACD) oscillator is crossing below the zero line for an outright sell signal.
In this Point and Figure chart of LB, below, we can see a downside price target of $34.12 shown. If this target was reached it would break the August/September lows.
Bottom line -- LB is on the ropes technically and we are likely to see prices test the $36-$34 area in the weeks ahead. Keep your powder dry.