Williams-Sonoma Could See More Price Softness

This is likely a normal correction in a longer-term uptrend.

One caller during Monday's Lightning Round segment of Mad Money asked Jim Cramer about Williams-Sonoma (WSM) . "I want you to hold onto it. I think RH (RH) is also going to have another great quarter," replied Cramer. 

But what do the WSM's charts say? 

When we looked at WSM on March 19, we wrote that " If you are still long WSM, great! If you took profits yesterday at our $156 price target that is also great. We need to see some sideways trading action before adding to or rebuying WSM. Wait for it to develop. Maybe we will get a dip to $150 to go long and risk $140. The round number of $200 and then $230 are the price targets."

Let's check out the latest charts of WSM.

In the daily bar chart of WSM, below, we can see that the shares have rolled over in recent weeks. Prices are pointed down in the short-term and we might still get the dip to $150 we suggested back on March 19. Prices are still well above the rising 50-day moving average line and the rising 200-day moving average line.

The On-Balance-Volume (OBV) line shows only a mild decline this month suggesting only a mild amount of liquidation or profit-taking. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the downside for a take profit sell signal. 

 

In the weekly Japanese candlestick chart of WSM, below, we can see only a little bit of weakness creeping in. The two most recent candles are red, which tells us that the close is lower than the opening.

 

The slope of the 40-week moving average line is still positive and the OBV line shows the start of a dip this month. The MACD oscillator has narrowed a little but is far from a bearish crossover. 

 

 

In this daily Point and Figure chart of WSM, below, we can see a potential downside price target in the $153 area.  

 

 

Bottom-line strategy: It looks like WSM could pull back a little more before finding buying support. With no signs of a major technical top I would consider this a normal correction in a longer-term uptrend. If WSM stops short of $153 it will be a sign of strength in my book.

 

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