In the first of three "Executive Decision" segments Monday night on Mad Money, Jim Cramer sat down with Laura Alber, CEO of Williams-Sonoma (WSM) , a stock that fell 5% Monday amid ongoing trade fears.
Alber explained that she anticipated the increased tariffs over a year ago and immediately began taking steps to mitigate the problem. The company began moving manufacturing out of China and into Vietnam and Indonesia, and renegotiated contracts with the remaining Chinese suppliers.
Alber added that they are currently hiring 500 additional workers at their U.S. locations. She said having domestic locations was not only a smart financial decision, it also allows them to make custom products even faster. When asked about their expansion into business accounts, Alber noted that many businesses are looking for alternatives to the status quo and that's what Williams-Sonoma's brands can offer.
It is easy to check out the products in a WSM store and frankly it is also easy to check out the charts. Let's do it.
In this daily bar chart of WSM, below, we can see that price have been struggling to clear the declining 200-day moving average line. Recently, prices turned down below the declining 50-day moving average line.
The volume pattern does not give us any clear clues and the On-Balance-Volume (OBV) line has been stalled/weakening the past eight weeks.
The Moving Average Convergence Divergence (MACD) oscillator has declined below the zero line for an outright sell signal.
In this weekly bar chart of WSM, below, we can see the action of the past three years - trading has been choppy and trends have not been long sustained. WSM is currently below the declining 40-week moving average line.
The weekly OBV line has been declining from August and tells me that sellers have been more aggressive.
The weekly MACD oscillator looks like it is failing at the underside of the zero line for a fresh sell signal.
In this Point and Figure chart of WSM, below, we can see that prices are pointed down and have exceeded a downside price target of $53.43. The volume by price data on the left side of this chart suggests that further declines are possible as there is not a pattern of heavy volume below $51.
Bottom line strategy: While the company WSM may have taken steps to deal with a challenging environment, the stock WSM looks vulnerable to further weakness. I would wait for a better buying opportunity and a rising OBV line.
