The Wall Street Journal ran a story Wednesday on Fossil Group (FOSL), on its worse-than- expected earnings result. Fine, but the story missed the bigger trends in the industry that surfaced at this year's annual Basilworld Watch Fair in March. And the author could have looked at the other publicly held watch companies to see if this was not unique to Fossil.
But hey, that's why you subscribe to Real Money.
The share price of Fossil Group (FOSL) has been under pressure over the past 12 months (chart above). It looks like a February-March rebound has run its course and a retest of the January lows is likely.
Prices are below the declining 50-day and 200-day moving average lines. The On-Balance-Volume (OBV) line shows no real pick-up in accumulation/buying from the January price low. Last, we fail to find any momentum divergences that might suggest turnaround.
This three-year weekly chart, above, shows the big decline that FOSL suffered. Despite the 2/3 retracement, the OBV line is not turning up and prices remain below the declining 40-week moving average.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line and only signaled a cover shorts buy signal. A retest of the lows on FOSL is likely, and without any signs of aggressive buying, new lows would not surprise.
Movado Group (MOV) has a stronger-looking short-term chart (above) than FOSL, but its weekly chart suggests more sideways action lies ahead. MOV has found buyers in the $22 to $21 area three times in past year.
Prices have crisscrossed the 50-day and 200-day moving averages several times, while the OBV line has been in a trading range since September.
In this longer-term chart of MOV we can see a $10 trading range. Prices are above the 40-week moving average line and the MACD oscillator is above zero, but the OBV line does not reveal any sustained aggressive buying.
The level to watch on MOV is a weekly close above $31 or below $26. Above $31 and we like the long side, but below $26 we are likely to revisit the $22 area again.
And now we come to Swatch Group AG (SWGAY). Like the other two companies we looked at, SWGAY has been in a downtrend. Prices bounced up from a January low, but after some limited strength we are back below the 50-day and the 200-day moving averages.
The OBV line is weak and there are no bullish divergences to foreshadow some price improvement.
SWGAY lost half its market cap in the past two years, and it is still below the declining 40-week moving average. The OBV line on this timeframe is not encouraging and the MACD oscillator is still below the zero line, telling us the trend is still bearish. A move to new lows below $16 could be in the cards before buyers are attracted to this stock.