Gap Inc. (GPS) is the Stock of the Day at Real Money. The stock is trading around 15% lower Friday morning. Looking at media reports it seems first-quarter comparable sales fell 4% to miss the consensus estimates. Looking ahead, GPS sees comparable sales down at a low single digit rate for the full year. Not a good fundamental outlook, in my opinion.
Let's check on the charts and indicators for some parameters.
In the daily bar chart of GPS, below, we can see that prices have been in a downtrend the past twelve months. GPS has spent most of the past year below the declining 200-day moving average line and below the bearish 50-day line.
The daily On-Balance-Volume (OBV) line also shows a downtrend and will probably make a new low Friday -- a clear sign that sellers of GPS have been more aggressive.
In the lower panel is the 12-day price momentum study, which unfortunately shows that the downtrend has not slowed in recent weeks. If momentum was slowing it would be a sign that longer-term investors found the price level increasingly attractive.
In the weekly bar chart of GPS, below, we can imagine that prices could test and perhaps break the 2016 low. GPS is below the declining 40-week moving average line.
The weekly OBV line has been in a downtrend since early 2018 and the MACD oscillator has been below the zero line since early 2018 -- all long-term negatives.
In this weekly Point and Figure chart of GPS, below, we can see a longer-term potential price target of $11.
Bottom-line strategy: GPS has been in a long-term decline so I hope that Real Money readers are out. Continue to stand aside of GPS as prices are likely to retest the lows of 2016 and maybe 2011.