Canada Goose

It was a bad day in the U.S. stock market, but it's an even worse day for Canada Goose (GOOS - Get Report) .

Shares closed lower by 7.3%, ending the day just short of $40 at $39.97 as investors reacted to its quarterly results.

The fiscal first-quarter report reflected a loss of 21 cents a share, a gap 3 cents wider than analysts' FactSet-derived estimate. Revenue surged almost 60% to $71.1 million, topping expectations of $41.1 million.

Management said the company saw "robust growth in every geographic region," particularly in Asia. Surprisingly, though, they maintained their full-year guidance from May, despite the strong quarter of revenue.

Either investors don't care about the revenue beat or they are simply throwing out Canada Goose stock with the rest of retail. Macy's (M - Get Report) is helping lead the group lower, falling over 14% on disappointing earnings. Nordstrom (JWN - Get Report) , Kohl's (KSS - Get Report) , J.C. Penney (JCP - Get Report) and others are all under notable pressure as well.

Could Canada Goose stock have a lot further to fall, too?

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Trading Canada Goose Stock

Daily chart of Canada Goose stock.
Daily chart of Canada Goose stock.

Despite the selling pressure in the overall market in late July, Canada Goose stock was doing quite well -- until it ran into the 61.8% retracement near $47. The shares stopped dead in their tracks, reversing lower.

After that, investors quickly found GOOS stock pinballing in a short-term downtrend channel (blue lines).

With Wednesday's post-earnings action, Canada Goose is threatening to break below support. Worse yet, while the stock opened near the 50-day moving average and rallied higher, it was quickly knocked lower by channel resistance and the 20-day moving average. The 50-day moving average quickly failed after that.

Short of a late-session rebound, Canada Goose stock could have more downside to go. How much downside are we talking about, though?

A notable line in the sand is $36, which acted as resistance in May and support in June. To get there, GOOS stock would need to fall another 8.2% from current levels. At least at that point, bulls would have a better risk/reward since they would have a downside level to measure against.

Below that mark and $33 is on the table, a decline of 16% from current levels.

The bottom line: To go long Canada Goose stock, investors need to see the shares either fall into further support or reclaim the 50-day moving average. Until then, let GOOS stock play out.

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