Nordstrom, Inc., a fashion specialty retailer, offers apparel, shoes, cosmetics, and accessories for women, men, and children in the United States. It operates in two segments, Retail and Credit. The Retail segment offers a selection of brand name and private label merchandise. This segment sells its products through various channels; online private sale subsidiary, HauteLook, Inc, as well as online store, Nordstrom.com; and catalog sale. As of July 30, 2014, this segment operated 271 stores, including 117 full-line stores, 151 Nordstrom Racks, 2 Jeffrey boutiques, and 1 clearance store in 36 states. The Credit segment operates Nordstrom fsb, a federal savings bank, which provides a private label credit card, two Nordstrom VISA credit cards, and a debit card. Its credit and debit cards feature a shopping-based loyalty program.
Take a look at the 1-year chart of Nordstrom (NYSE: JWN) with my added notations:
JWN has been trading sideways for the last 3 months. Over that period of time the stock has formed a resistance level near $70 (red). In addition, JWN has also created a level of support at around $67 (green). At some point the stock will have to break one of the two levels that the sideways consolidation has created.
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The Tale of the Tape: JWN has a support area near $67) and a resistance area around $70. The possible long positions on the stock would be either on a pullback to $67, or on a breakout above $70. The ideal short opportunity would be on a break below $67.
Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.
No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!
Christian Tharp, CMT
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