Pier 1 Imports, Inc. (PIR) is a specialty retailer of decorative items for the home. Gifts such as lamps, artificial flowers, dinnerware and candles may find their way to the base of many Christmas Trees this season.

The stock closed Monday at $5.28, down 38.2% year to date but in bull market territory at 33.3% above its post-election low of $3.96 set on Aug. 18. The stock set its post-election high of $9.67 on Dec. 21, 2016, and is in bear market territory since then with a decline of 45.4%.   

The stock has had a volatile ride since trading up from as low as $3.73 on Sept. 12, 2016, to as high as $9.67 on Dec. 21, 2016, before crashing to as low as $3.96 on Aug. 18. This significant weakness is evaluated using Fibonacci retracement levels on the daily chart shown below.  

Analysts expect Pier 1 to post earnings per share between 8 cents and 14 cents when it reports results after the closing bell on Dec. 13. Investors should look for guidance relative to plans to improve supply chain strategies and implement fresh marketing and merchandising campaigns. Although year-over-year comparisons may be flat, holiday shopping may show a surge, as it did a year ago. (See also: Will Pier 1 Imports Prove to be a Suitable Value Pick?)

The daily chart for Pier 1

Daily technical chart showing the performance of Pier 1 Imports, Inc. (PIR) stockCourtesy of MetaStock Xenith

The daily chart for Pier 1 shows horizontal lines that represent the Fibonacci retracement levels of the 159% rally from the low of $3.73 seen on Sept. 12, 2016, to the post-election high of $9.67 set on Dec. 21, 2016. The chart clearly shows that the stock is above its 200-day simple moving average of $5.25 for the first time since May 12, when the average was $6.14. Note that the stock is well below the 61.8% retracement of $5.99, which is the target on a positive reaction to earnings.

The weekly chart for Pier 1

Weekly technical chart showing the performance of Pier 1 Imports, Inc. (PIR) stockCourtesy of MetaStock Xenith

The weekly chart for Pier 1 is positive, with the stock above its five-week modified moving average of $4.78, which indicates upside potential to its 200-week simple moving average at $9.32, which is the stock's "reversion to the mean." The stock failed at this milestone during the week of Feb. 6, 2015, when the average was $17.39. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 62.25, up from 49.10 on Dec. 8.

Given these charts and analysis, my trading strategy is to buy weakness to my weekly and quarterly value levels of $5.07 and $4.38, respectively, and to reduce holdings on strength to my annual risky level of $24.11. (For more, see: Pier 1 to Shutter Up to 25 Stores.)


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