Bottom fishermen are picking up shares of macy’s, Inc. (M) even if the stock fell to a low in March and rival J. C. Penney Company, Inc. (JCP) has just declared bankruptcy. The Accumulation of readings have been impressive, hitting all of the highs, but the underlying mathematics have been distorted to some extent by heavy short sales during the first quarter swoon and just as vigorous short-covering during the three month rebound.
The hope of the offers are highly speculative, because Amazon.com, Inc. (AMZN) and other e-commerce juggernauts have taken market share from macy’s and other mall anchors for more than five years, and there are no signs that the exodus is going to end soon. In addition, the pandemic could permanently change the buying habits of many older Americans who choose to avoid crowded places to minimize the risk of infection.
Interested investors can gain insight on the current outlook for this week during a scheduled presentation at Cowen’s retail conference offers a perfect opportunity to disclose the financial trends. Macy’s has recently reported that 68 shops have reopened the first week of May, and the application of approximately 50%, compared to 2019, has been higher than expected. It has also been noted that digital sales have been “resilient”, but no specific criteria have been offered.
Macy’s has also warned that its second-quarter results would generate a lot weaker than the first quarter. The directives issued during the May 21 benefit of presentation is at the research of revenue of $3.00 billion to $ 3.03 billion, compared to estimates of$ 3.38 billion, and an operating loss of nearly $ 1 billion. It is likely that the company may not survive more than a few-quarters of the bleeding of cash at this rate, so it’s no surprise that Macy’s is looking for a major sales pick-up in the second half.
M Long-Term Chart (2007 – 2020)
The stock topped in the middle of$40 in 2007 and sold into the single digits during the economic collapse of 2008. Upwards subsequent has taken more than four years to complete a round trip in the state of the high, which gives an immediate escape, which posted a record high of $73.61 in July 2015. The decline in subsequent failure of the escape in the fourth quarter, adding to a downward trend, which has posted a series of lower lows in November 2017, when it bottomed out in the upper part of adolescence.
The rally stalled and recovery .382 Fibonacci sale retracement level in the summer of 2018, restore the selling pressure eased after the failure 2017 support in August 2019. The stock floated over five months, and sold once more, at the beginning of 2020, breaking down to a new low over the course of the pandemic, driven by the decline. The price action below the 1993 low of 75 cents before bottoming out and bouncing back in the second quarter.
M Short-Term Chart (2017 – 2020)
The balance volume (OBV), the accumulation-distribution indicator garnished with prices in 2018 and entered into a distribution phase, which was completed in September 2019. Buying interest in 2020 failed to reach the previous peak, producing renewed downward that cut through the 2019 low in March. The power of buying and short covering, since that time have been phenomenal, the lifting of the indicator at the top of the 2015, 2018, 2019 and 2020 the treble. In turn, this suggests that the stock has finally hit bottom and is entered in a new trend that could last for several years, at least.
The price action is lagging behind enthusiastic volume of readings in a distant country, but has now reached the levels recorded in March after breaking above a two-month between $4.50 and $ 7.00. It has also cleared the 50-day exponential moving average (EMA), increasing the likelihood that the increase will reach 200 days EMA resistance near $12. Despite the risk of generating short-term profits for the well-timed long positions, the wall of resistance in the mid-teens could take months to overcome, saying the majority of the market actor to sit on their hands.
The Bottom Line
Macy’s stock may be entered in a new trend, but the current reward-to-risk profile is not good enough for most investors to jump on board.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.