If You Can't Stand the Heat, Get Out of Williams-Sonoma
The housewares company looks like it could make traders sweat right now.
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Shares of housewares company Williams-Sonoma WSM are sliding lower Thursday after cutting full-year revenue guidance.
Some people like the front of the house and chatting up customers and others prefer the back of the house -- the kitchen. Many times the kitchen is not all that glorious -- it is hot, stressful and there is a lot of pressure when things don't go right and you fall behind. Remember that next time you go to a William-Sonoma store.
Now, let's see if we can take the heat and check out the charts and indicators of WSM.
In this daily bar chart of WSM, below, I can see that prices have been trending sideways to lower the past five months. WSM trades below the declining 50-day moving average line.
The rising 200-day moving average line intersects around $128 -- not all that far away. The On-Balance-Volume (OBV) line has been drifting lower since the middle of March and tells me that sellers of WSM have been more aggressive than buyers. The Moving Average Convergence Divergence (MACD) oscillator is below the zero-line.
In this weekly Japanese candlestick chart of WSM, below, I see some toppy price action the past five months with a number of candles with upper shadows. Upper shadows tell me that traders are rejecting the highs and that means the path of least resistance is now down. The 40-week moving average line has a positive slope and intersects around $130 -- not far below the market. The weekly OBV line has struggled like the price action since March. The MACD oscillator has been correcting lower since April.
In this daily Point and Figure chart of WSM, below, I can see a potential downside price target in the $125 area.
In this weekly Point and Figure chart of WSM, below, I can see that the software is projecting a potential price target in the $93 area.
Bottom line strategy: Shares of WSM are weakening after a five-month distribution pattern. Avoid the long side of WSM in the weeks ahead, but if you like to look busy in the kitchen you can check out their pasta makers.
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