Both Macy’s Inc M and Deere & Company DE had huge run-ups following big Q2 earnings beats. However, now that the earnings dust has settled, both stocks seem to be running out of buyers.
Macy’s stock soared 17 percent on the day of its earnings beat, jumping from $34 to nearly $41. After an initial three-day follow through that pushed the stock as high as $40.98 on August 16, Macy’s made a sharp 180-degree turn. The stock ran out of buyers and traded down in eight out of the next 11 sessions, including a 5.2 percent plunge on Wednesday. Macy's is now down 11.7 percent from its post-earnings high.
Deere’s chart looks eerily similar. The stock jumped 12 percent following Q2 earnings and initially demonstrated some follow through. However, after three days of gains, Deere peaked at $88.63 before trading down in five of the next six sessions. The stock is now down 5.0 percent from its post-earnings high.
Where should traders be looking for support? For Macy’s, the stock seems to have found temporary support at its 50-day simple moving average (SMA) around the $36 level. If that level fails, look for Macy’s to completely close its earnings gap by trading down to the $34–35 range.
For Deere, technical support may not come until it gets back down to the bottom of its trading channel in the $77–78 range.
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