Can Foot Locker Continue Its Winning Earnings Run?

It hasn't been easy for the specialty retailer, whose stock has fallen in the last two months.
By Richard Suttmeier ,

Foot Locker (FL) - Get Report , the retailer of athletic shoes and apparel, reports earnings before the opening bell on Friday, hoping to continue its eighth straight quarterly winning streak. It won't be easy.

Although the stock has been under a positive technical indicator known as the "golden cross" since Nov. 27, 2013, Foot Locker has fallen into bear market territory since hitting an all-time high on Sept. 25.

A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average, indicating higher prices lie ahead. The stock's weekly chart had tracked upside momentum since it last tested its 200-week simple moving average during the week of Sept. 24, 2010.

Foot Locker, like many retailers, has been on a stock roller coaster and would need positive reaction to its earnings to regain momentum. TheStreet's Jim Cramer, for instance, recently advised investors to "ring the register" on the company after a recent big run in the stock.

Analysts expect Foot Locker to earn 94 cents a share. The consensus calls for the company to report a year-over-year rise in earnings per share and revenue. TheStreet Ratings team rates the stock a buy.

Here's the daily chart.


Courtesy of MetaStock Xenith

Foot Locker closed at $59.50 Tuesday, down 17.3% so far in the fourth quarter but up 5.9% year to date. The stock is in bear market territory 23% below its all-time high of $77.25 set on Sept. 25.

From the lower left you can see the "golden cross" that was confirmed on Nov. 27, 2013, when the stock closed at $38.97. The stock began 2015 testing its 200-day simple moving average between Jan. 14 and Feb. 10 when the average was rising from $52.17 and $52.86. The stock turned on a dime after setting its all-time high and broke below its 200-day simple moving average when it was $65.08 on Nov. 10 and traded as low as $57.84 on Nov. 16.

Here's the weekly chart.


Courtesy of MetaStock Xenith

The weekly chart is negative, with the stock below its key weekly moving average of $65.26 and well above the 200-week simple moving average of $44.81. The weekly momentum reading is projected to decline to 25.89 down from 32.13 on Nov. 13.

Momentum scales from 00.00 to 100.00 with a reading below 20.00 oversold and a reading above 80.00 overbought. A rising reading above 20.0 is positive while a declining reading below 80.00 is negative. This study is shown in red along the bottom of the chart.

Investors looking to buy Foot Locker should place a good till canceled limit order to buy the stock if its drops to the 200-week simple moving average of $44.81.

Investors looking to reduce holdings should place a good till canceled limit order to sell the stock if it rises to the 200-day simple moving average of $65.24.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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