Macy's Still In Consolidation Mode Following Earnings Rally

Macy’s Inc M shareholders had cause to celebrate earlier this month when the company reported a big Q2 earnings beat that sent the stock soaring 17 percent. On Macy’s earnings day, the stock jumped from $34 to nearly $41 and delivered three more gains in the days that followed. However, after hitting $40.98 on August 16, Macy’s stock has stagnated. In fact, Macy’s made a series of lower highs in seven of the next eight trading sessions.

At this point, the stock is now right back near the $39 level, and traders are trying to figure out whether this post-earnings consolidation indicates a possible breakout or breakdown.

There are several key levels for Macy’s traders to watch in the short term. First, the stock’s 200-day simple moving average (SMA) now rests at $36.42. The post-earnings spike shot Macy’s stock above its 200-day SMA for the first time in more than a year, and traders could now see that level as possible support.

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Second, Macy’s could end up closing the gap it created following earnings, which would mean a dip back down to $34.79. Either way, a pullback to either the 200-day SMA or a gap fill could be followed by a resumption of the uptrend.

Macy’s shareholders have likely been disappointed with the lack of follow-up following the initial earnings spike. However, stocks rarely move in a straight line, and Macy’s stock has been particularly volatile in the past year.