Following Bigger-Than-Expected Losses, RH Is in Trouble
Furniture retailer RH has seen its shares down in the premarket after reporting losses, and the charts show more trouble ahead.
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Shares of furniture retailer RH RH are trading around $243, or down some $34 in the premarket on Friday. On Thursday night, RH reported a non-GAAP EPS of -$0.40, which missed estimates by $0.31, and revenue of $726.96 million which beat analyst estimates by $1.81 million.
Let's check out the charts and indicators for what levels may come into play in the weeks ahead.
In this daily bar chart of RH below, I can imagine that prices are retesting the lows of May and April. A break in these lows would turn the trend down and probably open the way to further losses. Prices are trading below the declining 50-day moving average line and below the declining 200-day moving average line. The On-Balance-Volume (OBV) line has struggled in a rough sideways trend since November. The trend-following Moving Average Convergence Divergence (MACD) oscillator has been hugging the zero line for several months before today's weakness.
In this weekly Japanese candlestick chart of RH below, I can see that prices have been struggling to make a base for the past two years. Prices have traded around the 40-week moving average line. The weekly OBV line shows a slight upward drift over the past two years — not a very convincing move. The MACD oscillator is slightly below the zero line in sell territory.
In this weekly Point and Figure chart of RH below, I can see that the software is suggesting a downside price target in the $125 area.
Bottom line strategy: Is the housing market in trouble? That's above my pay grade, but I can say that the charts of RH have some troubles if the lows of April are broken. A trade at $204 on the Point and Figure chart opens the way to further weakness in the weeks ahead.
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