Tuesday, December 22, 2015

M Macy's Weekly Chart Oversold Positive Divergence

Macy's has been slapped silly over the last six months from 73 to 35, -52%. That is going to leave a mark. M was a darling of long traders for the couple years prior now it is thrown into the trash bin of history. As Keystone mentioned at the time, the red rising wedge and negative divergence and indicators coming off the oversold levels forecasted a spankdown and it was a doozy. The collapses from rising wedges can be quite dramatic; this one was.

Macy's receives hand wringing and prophecies of doom as traders have given up on the retail giant. Temperatures in the northern hemisphere are very warm but Macy's has racks and racks of winter coats, sweaters, wool suits, and other cold weather clothing no one wants. Nonetheless, as often is the case, stocks turn at extreme periods of sentiment. The charts always forecast the way forward. The daily chart is set up with positive divergence wanting to see a nice recovery rally and shorts covering will create rocket fuel to the upside.

The weekly chart above is set up with possie d (green lines) but the MACD line remains weak and bleak wanting another low in price after price bounces for a couple-few weeks from the other indicators. The monthly chart is in shambles and wants another low in price going forward on the monthly basis. Thus, short term, for you nimble traders, M is a nice play. It should receive a nice bounce but you cannot get too greedy since price should roll over again due to the MACD line. At that point, a more sustainable bounce will occur for the weekly chart but then that nasty monthly chart will reexert longer term negativity after that bounce.

So M should bounce right now and it may be a nice recovery rally, then after 2 or 3 weeks it may roll back over to the downside but that base can be bought as well for another bounce, then some sideways say into February and then Macy's will likely roll over and fall down the rabbit hole again. Keystone does not currently have a position in M. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.