My wife and I put on our masks and went to the local Lowe's (LOW) store the other day to pick up some items. The store was crowded, but still "safe", so I decided to look at their charts again.
We looked at LOW back on October 6 and wrote that, "Traders could go long LOW on a strong close above $170 risking a close below $155 for now. The $190-$200 area is our price target." Prices stopped short of our target and have rolled over.
Let's check the charts again.
In this updated daily bar chart of LOW, below, we can see that prices made a peak around the middle of October, then turned lower, and now display a pattern of lower lows and lower highs or a downtrend. Prices are trading below the declining 50-day moving average line. The slower-to-react 200-day line is still bullish and intersects down around $135.
Trading volume increased in November but the daily On-Balance-Volume (OBV) line has not yet turned lower.
The Moving Average Convergence Divergence (MACD) oscillator moved below the zero line in early November for an outright sell signal.
In this weekly Japanese candlestick chart of LOW, below, we can see a bearish engulfing pattern at the peak in October. Prices have turned lower but still remain above the rising 40-week moving average line.
The weekly OBV line has rolled over the past four months.
The MACD oscillator crossed to the downside at the end of October for a take profits sell signal.
In this daily Point and Figure chart of LOW, below, we can see that the $135 area is being projected as a potential downside price target. Chart support in the $140 area and below dates back to June and might not be all that strong.
Bottom line strategy: The marketplace is a discounting mechanism and that can explain why the stock is looking weak while the store is busy. Avoid the long side of LOW until fresh support develops.
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The watchmaker saw its shares hammered on its outlook, which is a cautionary tale for other stocks.
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