Foot Locker, Inc. (FL) is the athletic shoes and apparel retailer found at a mall near you. This is the store to go to when you want to make sure your new sporty shoes are the perfect fit. This retailer operates both in the U.S. and in developed countries around the world. The company has felt the pressure from online sales competition, but in my judgment, consumers want to feel the comfort before buying a new pair of shoes.

Analysts expect Foot Locker to post earnings per share of 80 cents when it reports results before the opening bell on Friday. Earnings and revenues are expected to decline year over year, but this may be built into share price weakness experienced so far in 2017. Optimistic opinions include expectations that Foot Locker's online sales growth, store refurbishments and international expansion may have saved the day. (See also: Foot Locker Sets Confident Tone.)

Foot Locker stock has been below a "death cross" since June 6, when it closed at $55.08. A "death cross" occurs when the 50-day simple moving average falls below the 200-day simple moving average, indicating that lower prices lie ahead. This indicator has tracked the stock significantly lower since then.

Foot Locker shares closed Wednesday at $31.20, down 56.0% year to date and in bear market territory at 60.7% below the Dec. 8, 2016, high of $79.43. The stock is 9.8% above its Nov. 8, 2017, low of $28.42.

The weekly chart for Foot Locker

Weekly technical chart showing the performance of Foot Locker, Inc. (FL) stockCourtesy of MetaStock Xenith

The weekly chart for Foot Locker is negative but oversold, with the stock below its five-week modified moving average of $32.67. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 12.25 this week, up from 8.91 on Nov. 10. This reading is still well below the oversold threshold of 20.00.

The stock is well below its 200-week simple moving average of $58.52. I consider this moving average as the "reversion to the mean." This is an investment theory that the price of a stock will eventually return to a longer-term simple moving average, and the 200-week is simple to track. A ticker trading above its "reversion to the mean" will eventually decline back to it on weakness. Similarly, a ticker trading below its "reversion to the mean" will eventually rebound to it on strength. Notice that Foot Locker has been below its 200-week simple moving average at $58.52 since the week of June 9.

Given this chart and analysis, my trading strategy is to buy weakness to my weekly and monthly value levels of $27.12 and $21.81, respectively, and to reduce holdings on strength to my quarterly risky level of $43.05. (For more, see: Top 7 Companies Owned by Foot Locker.)

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