Macy's, Inc. (M) is considered America's premier mall anchor with its nearly 1,000 Macy's and Bloomingdale's stores. Macy's has been feeling the drag of losing sales to online retail behemoth Amazon.com, Inc. (AMZN) since mid-2015. Since the week of July 17, 2015, shares of Macy's have crashed by 76% from the all-time high of $73.61 to a multi-year low if $17.41 set during the week of Nov. 10, 2017. The department store giant is set to report quarterly earnings before the opening bell on Wednesday, May 16.

Macy's stock closed Friday, May 11, at $29.64, up 17.7% year to date and up by a bull market measure of 31.9% since setting its 2018 low of $22.47 on Feb. 6. From its 2018 high of $32.45 set on April 27, the stock is down 8.7%, and it could fall into correction territory on a negative reaction to earnings.

Analysts expect Macy's to post earnings per share between 36 cents and 40 cents when the mall anchor reports results on Wednesday. Macy's reported solid fourth quarter earnings on Feb. 27, propelling the stock higher. Can this performance continue? It depends upon strength from Amazon.com, which had a blow-out quarter. For Macy's, continued online sales growth must keep up with the growth at the online retail leader. (See also: Macy's and the Day Retail Died.)

The daily chart for Macy’s

Daily technical chart showing the performance of Macy's, Inc. (M) stockCourtesy of MetaStock Xenith

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. On Feb. 6, investors could have added to positions on weakness to the 200-day simple moving average, then at $23.10. The horizontal lines show that the stock is between my semiannual value level of $25.66 and my monthly risky level of $31.85.

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The weekly chart for Macy's

Weekly technical chart showing the performance of Macy's, Inc. (M) stockCourtesy of MetaStock Xenith

The weekly chart for Macy's is neutral, with the stock just below its five-week modified moving average of $29.68 and well below its 200-week simple moving average at $42.00, which is also the "reversion to the mean," last tested during the week of Nov. 6, 2015, when the average was $50.90. The 12 x 3 x 3 weekly slow stochastic reading slipped to 82.50 last week, down from 83.30 on May 4. A close this week below $29.68 with the stochastic reading falling below the overbought threshold of 80.00 makes the weekly chart negative.

Given these charts and analysis, investors should buy Macy's shares on weakness to my semiannual value level of $25.66 and reduce holdings on strength to my monthly risky level at $31.85. (For more, see: The Four R's of Investing in Retail .)

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