Macy's Shares at Key Chart Levels After Mixed Earnings

Macy's reported a bottom-line beat and a top-line miss. What do the charts say after the report?
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Macy’s  (M) - Get Report stock is down on Wednesday after the Cincinnati retailing icon's mixed fiscal-first-quarter earnings results.

The shares have flipped from positive to negative territory as investors sort out the numbers. Macy’s isn’t going belly up, but it’s clear this historic retailer isn’t exactly thriving at the moment.

A loss of $2.03 per share beat estimates by 47 cents. But revenue fell 45% year-over-year to $3.02 billion, which missed analysts’ expectations by $700 million.

Investors understand why Macy’s sales were almost cut in half and profit was obliterated due to the coronavirus. But for a retailer that was already struggling before the Covid-19 outbreak, it’s difficult to figure out its value.

Retail has undergone a secular shift as Amazon  (AMZN) - Get Report and so many others move the landscape online. Investors’ attempt to “figure out its value” can be reflected in Macy's stock price, so let’s look at the charts.

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Trading Macy’s Stock

Daily chart of Macy's stock.

Daily chart of Macy's stock.

Macy's shares are flirting with a key area between $6.70 and $7. This zone was resistance for Macy’s stock after the coronavirus selloff, before the shares reclaimed this mark in late-May and early June.

This led to a rapid rally: Macy’s stock climbed to $10 before retreating 40%. We’ve seen similar moves by other beaten down stocks, like Royal Caribbean  (RCL) - Get Report and American Airlines  (AAL) - Get Report.

At this stage, with earnings out of the way, I am looking at two levels, one on the upside and one on the downside.

Moving higher first, keep an eye on the 20-day moving average. A close over this mark puts Macy’s stock over the key range we just discussed — $6.70 to $7 — as well as the 20-day. That would put $8-plus in play and possibly a retest of the June highs.

On the downside, I’m watching $6. This mark came into play near the June lows, but a close below here would also mean a close below the 50-day moving average.

From a technical perspective, losing $6 and failing to reclaim it would put the $4.80 to $5 area on the table.