Shares of Macy's (M) rallied sharply the past two to three months. The company has seen better days as it has had to struggle with reinventing itself as the world of retail changed rapidly in the past few years. However, shares of Macy's, which were trading quietly at $6 in October, touched $22 this week.
Let's check out the charts and indicators.
In the daily Japanese candlestick chart of M, below, we can see a large, bearish shooting star pattern on Wednesday. This was followed by a bearish candle on Thursday with an upper shadow and a red (bearish) real body -- this was confirmation of a top reversal. The Moving Average Convergence Divergence (MACD) oscillator has begun to narrow.
In this weekly candlestick chart of M, below, we can see the large upper shadow this week telling us that traders have rejected the gains above $15. Chart resistance above $20 turned the tide.
In this weekly close only Point and Figure chart of M, below, we can see that prices ran into overhead resistance after reaching the $15 price target.
Bottom-line strategy: I hope that Macy's continues to succeed in remaking itself for today's new retail environment, but the stock prices ran up too much and a pullback should unfold in the weeks ahead.
