Lowe's Continues to Lumber; More Downside May Be Ahead

NEW YORK (TheStreet) -- Shares of Lowe's (LOW) have been stuck in a tight range since their ugly May 20 breakdown. The stock has been consolidating since the company's disappointing first-quarter report, but has remained in a somewhat vulnerable position. This week, Lowe's has retested last month's low of $67.60 and has managed a slight bounce off that key support level.

It's unlikely that the stock will stage a strong rebound at this point. A break under the May low appears to be the stock's near-term course.

Once Lowe's falls below the $67.50 area, it will be headed for a major support zone. As the stock begins to pierce $66, its 200-day moving average will come into play for the first time since last August. Just below this level is Lowe's 2015 low, set back in early January at $65.35. For patient bulls, that support zone will present a low-risk entry opportunity. Downside momentum will likely pick up once again as the May low is taken out, but will probably ease as major support nears.

If Lowe's can build a short-term base as it tests its initial 2015 low, a healthy rally could develop. The stock would return to an oversold MACD (moving average convergence/divergence) reading not reached since the summer of 2012 once the $66 area is penetrated. If Lowe's fails to hold and closes below $64, it would indicate a lack of investor interest near a major support zone. A significant bottom may be quite a ways off it that is the case.

Click here to see the below chart in a new window.


At the time of publication, Morrow had no positions in the stocks mentioned.

More from Opinion

Elon Musk's Latest Twitter Tirade Is the Dumbest Thing on Wall Street

Elon Musk's Latest Twitter Tirade Is the Dumbest Thing on Wall Street

Elon Musk's Twitter Tirade Is the Dumbest Thing on Wall Street

Elon Musk's Twitter Tirade Is the Dumbest Thing on Wall Street

Why Google's Search Momentum Won't Be Badly Hurt by New EU Rules

Why Google's Search Momentum Won't Be Badly Hurt by New EU Rules

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Flashback Friday: Amazon, Chip Stocks, Memorial Day

Time to Talk Tesla: What Happened This Week, Elon?

Time to Talk Tesla: What Happened This Week, Elon?