A bear signal flashing for Macy's stock points to more downside ahead of Black Friday
Department store name Macy's Inc (NYSE:M) is gearing up for a wild next couple of weeks, with the Nov. 29 Black Friday event just around the corner, and its third-quarter earnings report due out before the open on Thursday, Nov. 21 next week. Today, the stock is getting a halo lift from Walmart's (WMT) strong earnings, up 2.9% at $16.50 at last check. However, this rally could be short lived, according to a study conducted by Schaeffer's Senior Quantitative Analyst Rocky White.
More specifically, M has crept up today to its 80-day moving average. According to White, there have been 11 other times over the past three years when Macy's stock came less than one standard deviation within this trendline. The data shows that one month after these signals, the stock was lower 80% of the time and down 7.69% on average. A similar move from where M currently sits could put the equity at $15.23, back below recent support at its 60-day moving average.
Macy's earnings history doesn't bode well for the equity either, considering that only one of its last five post-earnings sessions was positive. This includes a steep 13.2% next-day drop suffered back in August. This time around, the options pits are pricing in a 17.7% swing in either direction, more than double M's 7.9% next-day move averaged during these past five sessions.
Speaking of options pits, traders are picking up contracts at a slightly quicker than usual clip today, with 13,000 calls and 6,721 puts across the board so far. The weekly 11/22 15-strike put is seeing the most action, with new positions being opened. The November 16.50 call is also popular.
While calls are still outnumbering puts on an overall basis, there has been a trend toward bearish bets in the past couple weeks. Data on the the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows that M's 10-day put/call volume ratio sits in the 78th percentile of its annual range.
Analysts have taken an even more pessimistic stance on the retail issue, with five "hold" ratings and four "sell" or worse ratings right now, and not a single "buy" to be seen. What's more, the consensus 12-month price target of $17.87 is a slim 8.5% premium to current levels, unsurprising considering the stock's 44.7% deficit.