Foot Locker Inc. (FL) is up sharply in pre-market trading here on Wednesday following a third-quarter earnings beat and better-than-expected same-store sales growth. Net income at the athletic apparel retailer rose to $130 million from the year-ago $102 million and earnings per share of $0.95 cleared the consensus EPS forecast of $0.92. Those are the fundamentals, but let's check on the charts and indicators of this stock that also received an upgrade Wednesday from TheStreet's Quant Ratings service.
In this daily bar chart of FL, below, we can see a neutral to bearish pattern of trading ahead of the strength on Wednesday. Prices were crisscrossing the mostly flat 50-day moving average line, and as of Tuesday FL closed below it and the flat-to-slightly-declining 200-day average line. The On-Balance-Volume (OBV) line has been neutral to bearish since June and the Moving Average Convergence Divergence (MACD) oscillator has been trading around the zero line since July.
In this weekly bar chart of FL we can see that prices have had a rough time the last three years. Prices have been hugging the flat 40-week moving average line the last three to four months. The weekly OBV line is not signaling much in the way of aggressive buying and the MACD oscillator is right on the zero line.
In this Point and Figure chart of FL, below, we do not have the pre-market rally plotted. As of Tuesday's close the chart is weak and there is a downside price target being projected.
Bottom line strategy: One quarter is just one quarter and a strong opening is just a strong opening. The indicators of FL do not show much buying ahead of the earnings report. If FL is going to continue to rally it must show sustained and aggressive buying.