American retail giant Macy's (M) is having a rough year... The company's stock has plummeted about 21% so far in 2024.
Why I'm Heeding the Power Gauge's Warning on Macy's
By Vic Lederman, editorial director, Chaikin Analytics
American retail giant Macy's (M) is having a rough year... The company's stock has plummeted about 21% so far in 2024. That's a massive decline on its own. And it's made worse by the fact that the rest of the market is soaring... The S&P 500 Index is up roughly 26% this year. So there's no question that Macy's is suffering. But that suffering just got worse... Macy's just notified shareholders that it will be delaying its full third-quarter earnings release. Unfortunately, the company has some numbers cleanup to do before it can officially report. That's because an employee hid up to $154 million worth of expenses... Now, as far as we know, this isn't an embezzlement scenario. Instead, the employee was simply misreporting their department's expenses. At least, that's the story Macy's is going with right now. We'll see where the dust settles. Put simply, this was the last thing the company needed. But as crazy as it might seem, it feels like the Power Gauge knew something was off in advance. And as I'll also explain, it's still flashing caution on Macy's today...
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Folks, this kind of thing happens so frequently, I've almost gotten used it. It's just part of looking at the Power Gauge every day. But if you haven't seen this before, it might shock you... Seriously. I'm talking about the Power Gauge's eerie ability to flip "bearish" on a stock before bad news comes out. And that's exactly what happened with Macy's. Take a look at this chart with some data from the Power Gauge...
As you can see, 2024 didn't start out so bad for Macy's. The stock trudged mostly sideways for several months. And look at the middle panel in the chart above... It shows the stock's relative strength versus the S&P 500. And we can see that the significant underperformance didn't start until mid-May. As the year continued, Macy's couldn't keep pace. The stock's performance continued to slip. And we can see that Macy's wasn't able to hold its "bullish" rating. Then, at the start of October, something really interesting happened... Macy's dropped firmly into "bearish" territory. That's nearly two months before the company announced it had found the major issue with its accounting. Did the Power Gauge know in advance? Well, not exactly... You see, our system looks at 20 unique factors. They cover fundamental and technical attributes. And it's not unusual for information to reveal itself in these factors before it's officially announced. We can see this through the price action on the chart... factors like the rating trend from Wall Street analysts... the Chaikin Money Flow indicator measuring "smart money" trading activity on Wall Street... and more. The point is that with enough data, you can get a potential preview into what's coming next for a stock. And that's what happened with Macy's. We didn't know specifically what bad news was coming. But the Power Gauge could see that a lot had gone wrong for the company. So it's no surprise to learn that something bad was bubbling below the surface. And better still, it tells us that this isn't a "dip buying" opportunity... Today, Macy's holds a "bearish" rating in the Power Gauge. So our system sees more downside ahead. I'll be heeding that warning... and I encourage you to do the same. Macy's has delayed its earnings release. And who knows what other problems it'll dig up in the meantime. Good investing, Vic Lederman
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.99%
10
13
7
S&P 500
+0.33%
134
294
73
Nasdaq
+0.16%
28
58
15
Small Caps
+1.52%
603
1012
304
Bonds
+2.53%
Real Estate
+1.34%
8
22
2
— According to the Chaikin Power Bar, Small Cap stocks and Large Cap stocks are Bullish. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Materials
+3.34%
Industrials
+3.33%
Real Estate
+3.04%
Health Care
+2.48%
Discretionary
+2.28%
Staples
+2.2%
Financial
+2.08%
Utilities
+2.08%
Information Technology
+1.8%
Communication
+1.34%
Energy
-0.74%
* * * *
Industry Focus
Telecom Services
8
26
6
Over the past 6 months, the Telecom subsector (XTL) has outperformed the S&P 500 by +35.50%. Its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #12 of 21 subsectors and has moved down 5 slots over the past week.
Top Stocks
NTGR
NETGEAR, Inc.
ANET
Arista Networks, Inc
FFIV
F5, Inc.
* * * *
Top Movers
Gainers
SMCI
+15.99%
ENPH
+8.48%
ULTA
+7.17%
DXCM
+6.87%
ALGN
+6.48%
Losers
GEV
-5.78%
COP
-5.06%
VST
-4.8%
OKE
-4.72%
NVDA
-4.27%
* * * *
Earnings Report
Reporting Today
Rating
Before Open
After Close
ADSK, DELL
ADI, BBY
CRWD, HPE, HPQ
SJM
No earnings reporting today.
Earnings Surprises
ZM Zoom Video Communications, Inc.
Q3
$1.38
Beat by $0.07
A Agilent Technologies, Inc.
Q4
$1.46
Beat by $0.05
CENT.A Central Garden & Pet Company
Q4
$-0.19
Beat by $0.05
* * * *
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