Macy's Inc. (M) was last reviewed in early June when I wrote that "The rally in M is steep and could be considered extended. Because of the strong position of the indicators M may only see a sideways correction. If you are looking to start buying M or looking to add to longs I suspect that you will have to pay around $40 and orders much below the market will go unfilled. Stop protection could be raised to $33 from $31. The $46-$47 area is our next price target." Looking back over the past three months I can see that M did not follow my script and the price action has weakened. Let's review some updated charts.
In this daily bar chart of M, below, we can see that prices have moved below the declining 50-day moving average line. Prices are trying to hold around $36 but the next chart support, in my opinion, is down around $32-$31. The rising 200-day moving average line intersects down around $31 now. The On-Balance-Volume (OBV) line has been steady the past three months and is not giving us any bearish clues. Ignoring volume, the Moving Average Convergence Divergence (MACD) oscillator has slipped below the zero line for an outright sell signal.
In this weekly chart of M, below, we have a mixed picture. M is above the rising 40-week moving average line. The weekly OBV line, however, shows some weakness over the past three months and the MACD oscillator has crossed to a take profits sell signal.
In this Point and Figure chart of M, below, the program reads the price action as distribution (selling) and projects a potential downside price target of just below $29.
Bottom line strategy: Patient Macy's bulls doubled their money - is that enough? Maybe. Raise stop protection to $34 and let's see how things develop.