We reviewed the charts and indicators of Foot Locker (FL) a month ago, writing that, "the charts and indicators of FL have gotten better since December but they are not attractive on both time frames (daily and weekly) so I am neutral or standing aside on FL for now." Here we are a month later and FL prices are slightly lower prices , but we have also seen a bid for Finish Line (FINL) on Monday. A fresh look at FL could be a good fit this morning.
In this daily bar chart of FL, below, we can see that prices made a low in November and a high in late January. Prices have retraced around 50% or half of the year-end advance but our indicators do not yet have good traction to resume the rally. FL is trading between the declining 50-day moving average line and the declining 200-day line. A heavy volume downside gap in early March did not start a fresh decline but the subsequent gap filling rally this month has not been on strong volume.
The daily On-Balance-Volume (OBV) line made a high in February and a modest decline. Sellers of FL did become a little more aggressive the past five weeks but not overly bearish. In the lower panel we can see lower lows from the momentum study, which matches the price action. This is not a bullish divergence because momentum has not slowed suggesting scale-down buying.
In this weekly chart of FL, below, we have a mixed picture with our favorite indicators. Prices are back above the 40-week moving average line but the line is still in a down phase. The weekly OBV line shows some improvement over the past few weeks but it is still below the January zenith. The weekly Moving Average Convergence Divergence (MACD) oscillator is now above the zero line for an outright go long signal.
In this Point and Figure chart of FL, below, we can see a small breakout at $44.83 and an upside price target of $51.
Bottom line: While the technical picture for FL is still mixed, we see an attractive trade from the long side. Aggressive traders cold go long FL risking below $40 looking for gains to the low $50s.