Buy Macy's After Earnings? Here's What the Charts Say

Macy's stock is up a bit on the day and up big from the post-earnings low. Here's what the charts are saying now.

Macy's  (M) - Get Report stock has been trading better lately, up a bit on the day and up big from the post-earnings low. 

The rally comes after the Cincinnati retailing icon reported third-quarter results. An adjusted loss of 19 cents a share came in much better than expected, with analysts looking for a loss of 79 cents.

Even though revenue fell 22% year over year to $3.99 billion, it was enough to top expectations of $3.86 billion.

And the real silver lining was online sales, which jumped 27%.

While the shares are up 2% at this writing, they are up 12% from today’s low. Further, if Macy’s can finish in positive territory on Thursday, it will mark the stock’s fifth straight day of gains.

Let’s look at the chart to see what may be next.

Trading Macy’s Stock

Daily chart of Macy's stock.

Daily chart of Macy's stock.

A look at the chart shows just what I meant by saying Macy’s has been trading better lately.

Earlier this month, the shares vaulted higher on positive vaccine news, reclaiming the 200-day moving average for the first time in about two years. That’s actually quite startling and concerning.

Be that as it may, Macy’s lost this key moving average a few days later and filled the gap from the vaccine pop. 

Luckily for the bulls, the dip was short-lived, with the shares ripping back over the 200-day moving average and taking out the November high ahead of earnings.

This was impressive bullish price action for a stock that has been under so much pressure. Perhaps it is not a surprise given its short interest and timing ahead of the holidays.

In any regard, $8 is becoming a clear line in the sand. This was resistance both in September and earlier this month on the vaccine rally. However, that mark was support on Thursday's initial earnings dip.

Below $8 will put the 200-day moving average in play, followed by the 50-day and 100-day moving averages, both currently near $6.65.

On a push higher, let’s see if Macy’s stock can test the 38.2% retracement at $9.52. 

Above $10 will put the June high in play at $10.46. Above that and a rally to the $12.50 to $13 area could be in the cards. 

The 50% retracement comes into play near $12.50, while $13 proved significant in February and March.