Although shares of jeweler Tiffany & Co. (NYSE:TIF) are still lower by nearly 4% for the year, they have seen a sharp rally since mid-summer. This rally has pushed TIF stock to a key technical inflection point — a break above which could lead to another squeeze higher, while a failure here could call for a 20% drop. Active investors and traders would be wise to watch this stock closely for good reward-to-risk opportunities.
Although many economists and fundamental equity research folks on Wall Street remain optimistic, if one measures the rate of change of economic and corporate top- and bottom-line data, then it becomes very clear that we are in a slowdown and have been since about the middle of 2015.
Yes, the broader U.S. large-cap indices such as the S&P 500 remain bid, but underneath the surface, plenty of stocks have long-ago made important lower highs and they remain far away from their respective all-time highs. Tiffany shares are a good example.
TIF Stock Charts
Looking at the multi-year weekly chart of TIF stock, we see that after topping out in late 2014 (just around the time when the broader U.S. equity market also began to stall in the bigger sense), the stock dropped sharply lower in January 2015 and it has been a one-way street ever since.
In September and October 2015, Tiffany stock also snapped its longer-term up-trend and went below the red 200-week simple moving average. As it stands, TIF stock’s 50-week and weekly moving averages are pointing lower and from a pure intermediate-term trend perspective, the trend remains lower.
On the daily chart, we see that while Tiffany stock had a sharp 30% rally off the late-June lows into August and October highs, the stock continues to trade in a sideways range that it has been in for all of 2016. Horizontal resistance around the $74 area is firmly in place, but after making another higher low in September, TIF stock attempted one more rally at this level this week and last week. From a candlestick perspective, we see that both the breakout attempts in August and, again, in recent days, have shown signs of exhaustion buying, as Tiffany stock closed off the intraday highs.
Timing is the key here and anticipating either a sustainable breakout or breakdown of TIF stock here is likely not a good reward-to-risk plan. A decisive daily close above the $75 area could get the stock moving toward $85, while a clear daily or weekly break below $71 could lead to a slip toward the mid $60s as a next downside target and eventually a re-test of the June lows in the high $50s.
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