Williams-Sonoma Jumps But May Need More Basing Than Basting

Specialty retailer Williams-Sonoma Inc. (WSM) reported its fourth-quarter and fiscal-year 2022 results Thursday morning. The stock is moving higher in early trading buoyed by a dividend increase and share buyback program but the "bigger picture" is different.

Let's sharpen up the charts on this cooking, dining, and entertaining products company.

In the daily bar chart of WSM, below, I can see a mixed picture. Share prices show us a pattern of lower highs from August to February but also a pattern of equal to higher lows from May to July to October to December. March could be another higher low but it is too soon to tell. WSM is still below the 50-day and the 200-day moving average lines.

The On-Balance-Volume (OBV) line has been on a downward path from August telling me that sellers of WSM have been more aggressive than buyers for seven months. The Moving Average Convergence Divergence (MACD) oscillator is bearish but could turn to the upside. 

In the weekly Japanese candlestick chart of WSM, below, I see a weak longer-term picture. The shares are trading below the declining 40-week moving average line but that line could get tested soon.

The weekly OBV line has been declining since November 2021. The MACD oscillator has been bearish since the beginning of 2022. 

In this daily Point and Figure chart of WSM, below, I can see a potential downside price target in the $97 area. 

In this second Point and Figure chart of WSM, below, I used weekly price data. Here the price target is also the $97 area. 

Bottom-line strategy: If I ignore the OBV line I may be impressed with the price action of WSM but I cannot ignore a weak indicator that I stress in my analysis. WSM looks like it will need further sideways price action and maybe further downside testing before I recommend aggressive purchases of the stock.

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