Macy's (M) is due to report its latest quarterly numbers Tuesday before the market open. The stock of the iconic retailer has experienced some sharp moves in recent weeks, probably not linked to consumers flocking to Herald Square. Let's check out the charts before earnings.
In this daily bar chart of M, below, we can see how prices had an explosive three-month rally from around $6 to $22 from November to January. Prices retreated quickly back to $14 and have been churning sideways. The slopes of the 50-day moving average line as well as the slower-to-react 200-day line are pointed up.
The On-Balance-Volume (OBV) did move up from November to January but I am not sure its rise justifies a triple in the stock. The Moving Average Convergence Divergence (MACD) oscillator has been weakening since early December.
In this weekly Japanese candlestick of M, below, we can see a very large upper shadow above $15 as traders quickly rejected those gains. Trading has been declining since May and that is not bullish.
The OBV line shows a rise from November but is still in a much longer downtrend. The MACD oscillator is bullish.
In this daily Point and Figure chart of M, below, we can see that prices reached a price target near $20. The volume by price bars suggest that a decline to $13.50 could precipitate further weakness.
Bottom line strategy: I have no special knowledge of Macy's earnings but the charts suggest that M could weaken in the weeks ahead. Avoid the long side for now.
