Macy's, Inc. (M) has long been considered America's premier mall anchor, operating some 826 stores under the Macy's, Bloomingdale's, and Bluemercury brands. Macy's began to feel the pinch of losing sales to online retail giant Amazon.com, Inc. (AMZN) in mid-2015. Since then, Macy's stock crashed by 76% from $73.61 to $17.41 in November 2017.
The stock closed Friday, Feb. 23, at $26.74, up 6.2% year to date and up 19% from its Feb. 6 low of $22.47. From its 2018 high of $27.64 set on Jan. 24, the stock fell deep into correction territory, but it has now recovered to just 3.3% below the high.
Analysts expect Macy's to post earnings per share between $2.69 and $2.72 when the mall anchor reports results before the opening bell on Tuesday. Macy's continues to lose sales to Amazon.com, but tax reform helped increase mall traffic during the holidays. Macy's has been closing stores, contributing to U.S. retailing's more than 8,000 store closures reported for 2017. (See also: Macy's Holiday Parade Ended on Christmas.)
The daily chart for Macy's
Macy's has been above a "golden cross" since Jan. 16, when the stock closed at $25.92. A "golden cross" occurs when the 50-day simple moving average moves above the 200-day simple moving average, indicating that higher prices lie ahead. This bullish crossover remains in play despite the stock correction. On Feb. 6, investors could have added to positions on weakness to the 200-day simple moving average at $23.10. The horizontal lines show that the stock is between my quarterly pivot of $26.27 and my semiannual risky level of $28.66.
The weekly chart for Macy's
The weekly chart for Macy's is neutral, with the stock is above its five-week modified moving average of $25.61 but well below its 200-week simple moving average at $43.57, which is the "reversion to the mean," last tested during the week of Nov. 6, 2015, when the average was $50.83. The 12 x 3 x 3 weekly slow stochastic reading slipped to 75.88 last week, down from 77.72 on Feb. 16.
Given these charts and analysis, investors should buy Macy's shares on weakness to the 200-day simple moving average at $22.87. My quarterly pivot of $26.77 has been a magnet so far in 2018. Investors should reduce holdings on strength to my semiannual risky level at $28.66. (For more, check out: Macy's Holiday Sales Update Leaves Investors Cold.)