There are several sectors that are ripe for consolidation, Jim Cramer said during his Mad Money program Monday night. There are too many retailers out there, which makes Foot Locker Inc. (FL) attractive. Let's check out the charts of FL.
In the daily bar chart of FL, below, we can see that the prices were in a downtrend from early March to late August. There is another trend visible and that is a sideways trend from late May. Both of these trends are not what investors find attractive. FL is trading below the flat 50-day moving average line and below the declining 200-day line.
The daily On-Balance-Volume (OBV) line was in an uptrend from early June but turned lower this month to break that uptrend and tell us that sellers of FL have become more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator had moved above the zero line in September for a buy signal but it is now back below the zero line and bearish.
In the weekly bar chart of FL, below, we can see that prices rallied to the underside of the declining 40-week moving average line and turned to the downside again.
The weekly OBV line has been working lower since March and the MACD oscillator is rolling over to a fresh sell signal below the zero line.
In this Point and Figure chart of FL, below, we can see that prices met a downside price target and currently trade between overhead resistance and underlying support. Sideways to perhaps lower price action is anticipated.
Bottom-line strategy: Foot Locker's assets may be attractive to some companies but the charts of FL are not a buy in my book at this juncture in time.
