Shares of the online home furnishings seller Wayfair (W) were downgraded to "sell" from "hold" by a small sell-side firm. Prices have been under pressure for some time now. Back on December 17 we reviewed the charts of W and concluded that "The charts and indicators of W are bearish with a capital B. Avoid the long side." Let's check the charts one more time.
In this daily bar chart of W, below, we can see that prices have been in a downward trend the past 12 months. Prices are trading below the declining 50-day moving average line as well as the declining 200-day moving average line.
The On-Balance-Volume (OBV) line has been weak since August and shows only limited improvement in recent weeks. The Moving Average Convergence Divergence (MACD) oscillator made a low in late January but still remains well below the zero line.
In this weekly Japanese candlestick chart of W, below, we fail to find any bottoming clues. Prices are in a long downtrend below the declining 40-week moving average line. There are two minor lower shadows which do not appear strong enough to suggest a rally is developing.
The weekly OBV line is still pointed down from August. The MACD oscillator has narrowed and could cross to a cover shorts buy signal at best.
In this daily Point and Figure chart of W, below, we can see an upside price target of $167 but we also see what is likely to be a fair amount of overhead resistance.
In this weekly Point and Figure chart of W, below, we can see a potential downside price target in the $69 area.
Bottom line strategy: I like to look at the social media ads for Wayfair and I even like to get the 10% off coupons in the mail. Unfortunately, I have yet to order anything from them. Maybe that is affecting my subconscious in seeing the charts as bearish. Avoid the long side of W.
