Macy's Inc. (M) will be reporting its third-quarter results here on Wednesday. Legions of retail analysts and competitors will be poring over the numbers looking for trends and clues to what may or may not be working in this important sector. Maybe even execs at Amazon.com Inc. (AMZN) will be paying notice. For myself I will be looking at the charts and indicators to see what clues and signals I can pick up from investors who have been buying and selling the stock of Macy's.
The last time I visited M was at the end of August. At that time I wrote, "Patient Macy's bulls doubled their money -- is that enough? Maybe. Raise stop protection to $34 and let's see how things develop." Over the past two-and-a-half months Macy's slowly declined to around $32, stopping out our long recommendation. Prices recently firmed back to around $38. What else is going on?
In this daily bar chart of M, below, we can see prices are above the rising 50-day moving average line and the bullish 200-day line. M tested the 200-day line through much of October, and closes below the line did not precipitate a downtrend. Since June the daily On-Balance-Volume (OBV) line has been flat, which suggests a balance between buyers and sellers even though prices have moved in an $8 range. In the lower panel is the trend-following Moving Average Convergence Divergence (MACD) oscillator, which is above the zero line but narrowing toward a possible crossover to the downside; that would be a take-profits sell signal.
In this weekly bar chart of M, below, we can see mixed signals since our review at the end of August. Prices are above the rising 40-week moving average line, but just barely. The weekly OBV line is still in a downtrend from early June even though it improved in October. The weekly MACD oscillator has narrowed in recent weeks and could turn up or down depending on the next move for M.
In this Point and Figure chart of M, below, we can see an upside price target of $41.74 being projected -- bullish, but not a new high for the move. We also can see that prices are in a down column and that a decline to $33.59 would be a new low for the move down.
Bottom line strategy: Investors probably are rooting for Macy's to succeed in this new world of retail, but since June they have not been aggressive buyers nor sellers. My gut (yes, this is totally non-scientific) says the risk is on the downside. Why? If savvy investors knew something really positive about M they would have been more aggressive buyers.
