Specialty online retailer Etsy (ETSY) has been suffering since late November when the stock price peaked after a dramatic two-year rise. Recently thousands of Etsy sellers have gone on strike over the increased fees being charged. Adding to the stock's woes, Oppenheimer lowered their price target.
Let's check out the charts and indicators. In our January 27 report we wrote that "A doji on the candlestick chart and a 50% retracement are two reasons to find shares of ETSY attractive but the trend is still down and the weekly Point and Figure chart has a potential target of $115. Prices might bounce enough for very nimble traders to scalp the long side but investors will need to wait."
In this daily bar chart of ETSY, below, we can see that prices stayed weak into late February and reached the $115 price target. Prices rebounded briefly in early March but those gains have been slipping away. ETSY is trading below the declining 50-day moving average line and below the weak 200-day line.
The On-Balance-Volume (OBV) line has held up better than prices in recent days. Too soon to tell if this divergence will amount to anything. The Moving Average Convergence Divergence (MACD) oscillator is below the zero line and pointed down.
In this weekly Japanese candlestick chart of ETSY, below, we see a bearish picture. Prices are in a downtrend below the declining 40-week moving average line. The weekly OBV line is pointed down and tells us that sellers of ETSY have been more aggressive with heavier volume being transacted on down weeks. The MACD oscillator is bearish but narrowing slightly.
In this daily Point and Figure chart of ETSY, below, we can see a downside price target in the $108 area.
In this weekly Point and Figure chart of ETSY, below, a downside price target in the $72 area is being projected.
Bottom line strategy: With the power of social media you cannot underestimate what a strike might do and consumers can be very fickle. My best advice is to avoid the long side of ETSY.
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