A day after a big rally on Wall Street, U.S. equities were getting slammed on Wednesday. For Macy's (M - Get Report) though, it's far worse than the S&P 500's 2.4% fall in midday trading. Shares of the retailer tumbled more than 13%, closing at $16.80 after disappointing quarterly results.

The retail sector continues to struggle, with Macy's disappointing bottom-line miss emphasizing the issue among department stores.

Earnings of 28 cents a share badly missed expectations of 45 cents. Revenue of $5.55 billion was in-line with expectations, prompting questions about the retailer's ability to turn a profit.

There are a few catalysts making matters even worse, though. First, management cut its full-year earnings outlook, putting an even gloomier spin on Macy's profit woes. Second, with the inverted yield curve, every investor seems to be shouting about an upcoming recession.

As you can guess, recessions don't bode well for retailers. Between Macy's report and economic worries, retailers aren't taking the news well. Kohl's (KSS - Get Report) and Nordstrom (JWN - Get Report)   each closed lower by more than 10%, while J.C. Penney (JCP - Get Report) is fell 5% and narrowly avoided making new all-time lows. 

All of this has dealt a huge blow to Macy's chart, with shares spiraling to multi-year lows.

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Trading Macy's Stock

Weekly chart of Macy's stock.
Weekly chart of Macy's stock.

As you can see on the chart, Macy's stock has been putting in a series of lower highs over the past 12 months. However, the trend lower has accelerated in 2019 even as the overall market has enjoyed a pretty strong return.

Channel support has been trending lower all year, but buoyed Macy's stock on each big decline. With Wednesday's decline though, M stock is breaching this level of support. It will be important now to see whether this level can be reclaimed as support or if it acts as resistance if and when Macy's stock bounces.

Now below its closing lows from 2017, the $15.86 lows are on the table. Below that and investors may find Macy's stock in no man's land much quicker than they had anticipated. Should the selling pressure continue to mount, there is a downside Fibonacci extension near $14. 

On the plus side, back-to-school shopping and the holidays are just around the corner. But with Macy's lowered guidance investors aren't exactly upbeat about its future.

So what's the bottom line? Watch the $15.75 to $16 zone. Below this and Macy's stock is a no-touch for bulls. If shares hold this mark or break below it and then reclaim it, a rally up to prior channel support and possibly $17.50 is in the cards.

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