Express, Inc. (EXPR) is a retailer of American fashion catered to young men and women. The company saw a positive reaction to earnings on Nov. 30 on indications that the 2017 holiday season would be positive. The stock surged to a 52-week high of $11.34 on Dec. 11. Express shares began 2018 sliding from this high and then gapped lower on Jan. 9, when the retailer warned that it had experienced disappointing store traffic. You can see this downbeat profit and sales outlook as a huge price gap lower on the daily chart below.

The stock closed Monday, March 12, at $7.36, down 27.5% year to date and in bear market territory at 29% below its 2018 high of $10.36 set as the year began on Jan. 2. The stock traded as low as $6.17 on Feb. 6 and is up 19.3% since then. This is significant volatility that investors will likely continue to face this week. Analysts expect Express to post earnings per share of 32 cents when the company reports results before the opening bell on Wednesday, March 14. Most mall-based retailers suffered from weak holiday foot traffic as shoppers shifted to buying gifts online, including apparel. (See also: The Industry Handbook: The Retailing Industry.)

The daily chart for Express, Inc.

Daily technical chart showing the performance of Express, Inc. (EXPR) stock

Courtesy of MetaStock Xenith

The daily chart for Express shows that the stock had a rare false “golden cross” on Dec. 8, as the 50-day simple moving average rose above the 200-day simple moving average. This normally indicates that higher prices lie ahead, but this obviously did not happen. There is now risk of a “death cross” in which the 50-day moving average, which is now at $7.55, crosses below 200-day moving average at $7.24. A negative reaction to earnings could confirm this negative formation, perhaps by the end of the week. The stock is below the horizontal lines at $7.87 and $8.20, which are semiannual and monthly risky levels, respectively. My quarterly value level is $5.25.

(To learn more about recognizing chart patterns, check out Chapter 5 of the Technical Analysis course on the Investopedia Academy)

The weekly chart for Express, Inc.

Weekly technical chart showing the performance of Express, Inc. (EXPR) stock

Courtesy of MetaStock Xenith

The weekly chart for Express is neutral but will be positive if the stock ends this week above its five-week modified moving average of $7.50. The stock is well below its 200-week simple moving average of $13.42, which is the “reversion to the mean,” last crossed during the week of May 13, 2016, when the average was $17.36. The 12 x 3 x 3 weekly slow stochastic reading is projected to end this week at 23.38, up from 22.71 on March 9. 

Given these charts and analysis, investors should buy Express shares on weakness to my quarterly value level of $5.25 and reduce holdings on strength to my semiannual and monthly risky levels of $7.87 and $8.20, respectively. (For additional reading, check out: 4 Cheap Retail Stocks That Can Outperform.)

Let’s block ads! (Why?)

Read More