We reviewed the charts and indicators for Foot Locker Inc (FL) last Friday, and sleeping on it for a weekend has not helped. Last Friday we said, "when FL opens for trading on Friday, the $45 to $51 area should now become resistance. Support may develop in the low $30s. Do not look for a recovery anytime soon, i.m.o."
Today, FL is still under selling pressure today, and with prices trading around $32.50, we remain bearish. Let's look at the charts and indicators again.
Looking at this updated daily bar chart of FL, below, we can see two large downside price gaps. There is a gap in May with heavy volume and a gap last week with even heavier volume. Both of these gaps show the intense desire of traders and investors to sell FL shares. Prices are of course well below the declining 50-day and the declining 200-day moving average lines.
The daily On-Balance-Volume (OBV) line has been in a steep decline since May, and made a new low last week. A declining OBV line tells us that sellers of FL have been more aggressive, with heavier volume being traded on days when prices have closed lower. In the bottom panel is the slow stochastic indicator. This overbought/oversold indicator is "buried" in oversold territory, but that means it is weak -- as being oversold is not a reason to go long.
In this updated weekly bar chart of FL, above, we can see that prices are well below the declining 40-week moving average line. The weekly OBV line is bearish and confirms the decline. The weekly Moving Average Convergence Divergence (MACD) oscillator is well below the zero line and not any closer to a cover-shorts crossover.
In this Point and Figure chart of FL, above, we see the sharp decline without any price gaps. There is old tentative support from $20.80 and lower from around 2008, and it may not be relevant as longs have had plenty of time to change their positions.
Bottom line: Low prices can be tempting, but this is not the store, rather the stock market. Cheap stocks can get cheaper. I would continue to avoid the long side of FL.