Levi Strauss & Co. (LEVI) , the iconic jeans maker, is set to open lower here on Wednesday in reaction to a soft second-half sales forecast that offset a second-quarter earnings beat. We don't have a lot of price history with this company, which issued its initial public offering (IPO) in March, but let's see what we can glean from the charts.
In this daily bar chart of LEVI, below, we used a 20-day moving average line and a 50-day moving average line. With only three months or so of price history to work with you need to make adjustments. Prices could open down near the rising 50-day line but probably above the rising 20-day average line.
The daily On-Balance-Volume (OBV) line declined from the middle of April to late June and then improved. The recent rise in the OBV line may have been from short-covering or maybe traders looking to buy ahead of the earnings report. The Moving Average Convergence Divergence (MACD) oscillator had just crossed above the zero line for a buy signal.
In this Point and Figure chart of LEVI, below, plotted through Tuesday's close, the software was projecting a modest upside price target. Prices were indicated around $22 in pre-market activity. On the left side of the chart is the volume by price bars, which suggest we might see buying in the $22.34 to $21.68 area.
Bottom line strategy: I have often noted that dealing with recent IPOs is a challenge for technical analysts as we depend on price history to draw conclusions. LEVI looks like it will probably decline into the $22-$21.50 area. The real risk point for me and longs is a close below $20.50.