by Serge Berger | January 13, 2014 8:10 am
Jewelry store operator Tiffany & Co. (TIF) reported Friday that its holiday sales rose 4% to $1.03 billion on a year over year basis, which led to a moderate slide in Tiffany stock after it had hit fresh all-time highs the week prior.
TIF said comparable store sales in the Americas increased 6% to $550 million during the November/December period, which is much better than the 3% increase in the same period a year ago. Interestingly, sales in Europe grew at 11%, thus faster than the 5% increase in the Asia Pacific region.
However, while sales were good overall, TIF merely reiterated its full year 2013 EPS forecast of between $3.65 to $3.75, thus failing to positively surprise Tiffany stock analysts and investors.
As a result, TIF shares were sold off to the tune of 1.79% on the day Friday for their biggest one-day loss in more than a month.
Through the lens of the below multiyear weekly chart, Tiffany stock showed technical excellence when it bounced off an important higher low in June 2012. The area where it bounced from corresponded with a 50% retracement of the entire rally off the 2009 lows up to the 2011 highs. From there, TIF stock — after its November earnings report — overcame the 2011 highs and although upside momentum began to fade, the stock continued to push higher into early January.
While TIF stock still is constructively positioned, the biggest issue (from a technical perspective) is that thus far it has not retested the breakout area from November, which would give it more solid footing at these extended levels. In other words, at these levels, Tiffany is at risk of retesting the $83-$84 area … though through this longer-term view, that actually would be a constructive move.
Now for a look at the daily charts.
Since the up-gap past resistance on Nov. 26, Tiffany stock has been pushing higher in a narrow but orderly fashion, namely within the confines of an uptrending channel. These types of patterns work until they don’t, which is to say that they are prone for a mean-reversion move … eventually.
In the case of Tiffany stock, last Friday’s selling marked the daily chart with an engulfing candle, or simply an outside day candle, which fully captured the previous 10 or so trading days’ ranges. These types of moves often continue lower, and barring any quick bullish turnaround, this now also looks to be the case for Tiffany stock.
Next support is at the 50-day moving average around $86.75, followed by lateral support and the 100-day MA around $83-$84.
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Learn more about the strategies Serge Berger uses to create profits in the market every day. Download his trading plan in the Essence of Swing Trading e-book by clicking here. As of this writing, he did not hold a position in any of the aforementioned securities.
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