Target (TGT) - Get Free Report, Walmart (WMT) - Get Free Report and others reported last week. This week, we’re hearing from Macy’s (M) - Get Free Report and other department stores. The results have been mixed, to say the least.
For Nordstrom, the stock is on the cusp of losing a key support zone in the $19 to $20 range. As highlighted below, this zone has been support all throughout 2022.
Driving today’s losses is the company’s quarterly update. While the retailer beat on earnings and revenue estimates, it gave a slight trim to its full-year revenue outlook and a significant cut to its full-year earnings outlook.
The guidance almost always has a bigger impact than the quarter the company just completed. And given that Nordstrom beat expectations for its second quarter, a tough six months could be on the way.
Let’s look at the chart to see what might happen if Nordstrom stock drops below the $19 to $20 zone.
Trading Nordstrom Stock’s Earnings Selloff
As noted above, this level has been significant support. Nordstrom flirted with a break of this level in February before bottoming at $18.65 and rallying more than 50%.
Interestingly, the shares bottomed at $18.66 this morning, just a penny above the 2022 low, but they are struggling to piece together a significant bounce so far in the post-earnings action.
If Nordstrom stock can turn higher, the bulls would love to see it clear $20.25. Not only would that send the shares back above the key $19 to $20 zone, but it would also put Nordstrom back above the July low.
It would also put it back above the 78.6% retracement (as measured from the 2022 high to the 2020 low).
Technically speaking, that opens the door to a potential gap-fill near $23, as well as a test of its short- and intermediate-term moving averages.
The concern on the downside is simple: A close below $19 and failure to get back above this mark opens the stock up to more downside.
Specifically, one area that jumps out to me is the $17.50 zone. Near that level — at $17.53 — is the gap-fill mark from November 2020.
Below that could open up even more downside. But without a significant deterioration in the overall market, I would hesitate to start mapping out downside levels that are more than 25% below yesterday’s closing price.
Should Nordstrom stock break down and fill the gap at $17.53, we can reassess the stock at that time.