TV commercials for Wayfair Inc. (W) always seem to get my attention. If I did not need a new couch for the living room, I probably would not pay attention.
The price rally in the stock from its November/December lows may have gotten your attention as well. (In last Friday's "Mad Money," Jim Cramer noted Wayfair has seen its shares rise 35% so far in 2019). The earnings report for this retailer may be getting both your attention and my attention Friday, so let's check out the charts ahead of the news.
In the daily bar chart of W, below, we can see that prices have seen some big swings up and down in the past 12 months. Traders have had to be nimble to be successful. The price action since November is "interesting."
Prices made a small double bottom (two price lows at approximately the same level). A decline from $150 down to $80 would normally, at least in my mind, attract more buying interest, but if you look at the volume histogram below the price chart, you do not see heavy volume at either the November nor the December low.
Heavy volume at the lows is a positive sign that buyers have come in with both feet, but that technical clue is missing. The daily On-Balance-Volume (OBV) line does turn up, but it has not broken above its December peak to confirm the price breakout. Prices are above the rising 50-day and 200-day moving averages, but that does not inspire me to buy.
The Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in late January for an outright go-long signal, but it has since crossed to the downside for a take-profits sell signal.
In the weekly bar chart of W, below, we see a mixed picture. Prices made a long base in the $40-$30 area before a mark-up to $150. The correction in late 2018 was deeper than earlier pullbacks. Prices are above the rising 40-week moving average line but just barely.
The weekly OBV line shows a positive trend from early 2017, when prices began their uptrend, but the line shows a peak in July and suggests significant liquidation (selling) the past seven months. The weekly MACD oscillator shows a cover-shorts buy signal in late January and is in the process of crossing the zero line for a more bullish signal.
In this Point and Figure chart of W, below, we can see that prices have made a large "W" or double bottom pattern, but the computer program is showing us a downside price target of $109.
Bottom line strategy: If W declines to its Point and Figure price target of $109, it will have closed below the rising 200-day moving average line. This bit of information, and charts that are not all that impressive, are telling me to stand on the sidelines for W's earnings report.