May 22 Chart of the Day - Foot Locker
Is more downside incoming for Footlocker (FL)?
The footwear retailer reported dismal earnings last week and an even bleaker future outlook. With bloated inventories and diminishing cash flow its future dividend sustainability is a huge question mark.
From a fundamental perspective the company's management should be able to make necessary adjustments to generate the short term cash it will need but from a technical perspective the stock price could continue its descent in search of a permanent bottom.
Is a dead cat bounce in store for the company? Maybe, but perhaps not anytime soon.
From Friday's $30.21 close, price this week or next could revisit the $27.50 area and trade sideways for a while before ultimately deciding whether to bounce or continue falling.
If price continues below and holds below $26.50 area that could put $23.85 as a downside target.
If that area were to fail $21.50 - $22.50 could provide a potential bounce zone. But if buyers don't step in there then $17.45 and below could be in play.
Ultimately, for any relief rally to be considered sustainable price would have to break above $32 and hold otherwise it would be considered a no-go. Only time will tell for sure what's ahead.
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