Weighing on the stock early was a downgrade to sell from neutral at Goldman Sachs. The analysts assigned a $12 price target, implying roughly 20% downside.
Does that make Macy’s stock a sell for investors?
Despite the headline, the shares are higher on a day when the broader market is about flat. In other words, buyers are stepping in and gobbling up the weakness in Macy’s.
That’s generally a bullish sign and is a good reason for Real Money to select Macy’s as Stock of the Day. Let’s take a closer look at the charts.
Trading Macy’s Stock
While Macy’s stock is rallying on a negative headline -- a bullish reaction to a bearish news item -- don’t mistake the Cincinnati retailer for Target (TGT) - Get Report or Home Depot (HD) - Get Report.
Nonetheless, the stock is starting to put in a series of higher lows, as shown via up-trend support (blue line). That’s evident on the weekly chart above, as well as the daily chart below.
On the weekly chart, it’s evident how significant the $17 level has been for Macy’s stock. With the stock now making a series of higher lows, bulls are hoping the shares can rally back to $17 and eventually break out over this mark. Above it could send the stock to the declining 50-week moving average, as well as downtrend resistance (purple line).
So what does Macy’s stock have to do in order to rally to $17 resistance?
First, the stock must avoid making new lows. Ideal would be for Macy's to maintain above up-trend support (blue line).
Further, to reach $17 it will need to hurdle the 20-day and 50-day moving averages. Over the past month or so, these moving averages have acted as resistance. Clearing them could give M stock the necessary momentum to run higher.
The bottom line: Watch up-trend support on the downside and the 20-day and 50-day moving averages on the upside. A break of either could kickstart a further move in the respective direction.