Nordstrom (JWN) is due to report earnings on Tuesday after the close. This full-price retailer is at a 52-week low, but Jim Cramer found it compelling as the company may try again to take itself private. Let's check out the charts and indicators ahead of the numbers.
In this daily bar chart of JWN, below, we can see a "lopsided" double top formation back in September and November. Prices turned down and in the middle of November they gapped sharply lower below the cresting 200-day moving average line.
Today JWN is trading below the declining 50-day line and the bearish 200-day line. In early January we can see a bearish dead or death cross of these two moving averages.
The trading volume has been neutral and the daily On-Balance-Volume (OBV) declined with prices from September to late February but since then it has made a bullish divergence when compared to price.
In the past two months the 12-day price momentum study in the lower panel shows another bullish divergence as momentum has made the same lows while prices have made lower lows. This divergence has not been going on for long but it is still worth pointing out to traders.
In this weekly bar chart of JWN, below, we can see that prices are retesting levels not seen since the middle of 2016. This area is several years back in history so support may be more psychological than real.
The weekly volume pattern shows a slight increase in turnover the past year-plus. The weekly OBV line shows weakness the past four to five months.
The 12-week price momentum study is giving us a bullish divergence from February to May with a higher low versus lower lows in price.
This divergence means that the pace of the decline this year has slowed and it could foreshadow a rally in the weeks ahead.
In this Point and Figure chart of JWN, below, we can see that prices have gotten close to a long-term price target of $35. Stopping short of a downside price target is a sign of strength to me.
Bottom line strategy: JWN looks like it could rally in the weeks ahead. Prices are oversold and a number of bullish divergences have been found on the charts. JWN may have made a low but because a base is not seen I would be reluctant to probe the long side at this juncture.