Chart Wars: Does Nordstrom or Urban Outfitters Appear Stronger After Q1 Earnings?

Chart Wars: Does Nordstrom or Urban Outfitters Appear Stronger After Q1 Earnings?
Nordstrom signage is visible at its store Nov. 21, 2003 in Chicago. (Tim Boyle/Getty Images)

Nordstrom Inc. and Urban Outfitters Inc. were soaring over 11 percent and 9 percent, respectively, on Wednesday after the retailers reported first-quarter financial results.

For the first-quarter 2022, Nordstrom reported a loss of 6 cents per share, which slightly missed the consensus estimate of a loss of 5 cents and revenues of $3.46 billion, beating the $3.28-billion estimate.

Urban Outfitters’ results were less impressive. The company reported EPS of 33 cents on revenues of $1.05 billion for the first quarter of 2022, which missed the consensus estimate an EPS of 42 cents on revenues of $1.07 billion.

Analysts weighed in on both stocks, consistently lowering their price targets. Nordstrom price targets issued on Wednesday came in between $27 and $31 and Urban Outfitters’ range from $29 to $39 at the high end.

The updated price targets suggest about a 16 percent bump for shares of Nordstrom and a 42 percent increase for Urban Outfitters’ stock.

From a technical standpoint, Nordstrom and Urban Outfitters look set to reverse course from their downtrends, although Urban Outfitters appears stronger due to two bullish candlestick patterns the stock has developed.

It should be noted, however, that events affecting the general markets, negative or positive reactions to earnings prints, and news headlines can quickly invalidate patterns and breakouts. As the saying goes, "the trend is your friend until it isn't" and any trader in a position should have a clear stop set in place and manage their risk versus reward.

The Nordstrom Chart

Despite the bullish move on Wednesday, Nordstrom remains in a downtrend, with the most recent lower high printed on May 17 at $24.39 and the most recent lower low formed at the $19.73 mark on Tuesday.
To reverse course into an uptrend, the stock will either need to rise up above the most recent lower high or consolidate down to form a higher low.
  • Nordstrom regained the eight-day exponential moving average (EMA) on its ascent, which may give bullish traders more confidence going forward. Next, traders will want to see Nordstrom regain the 21-day EMA, which the stock will do if it’s able to fill the closest overhead gap.
  • The gap, which was created May 18, falls between $23.40 and $23.98. Gaps on charts fill about 90 percent of the time, which makes it likely the stock will close the empty trading range and regain the 21-day EMA. There is a higher gap between $29.59 and $30.79, which is also likely to fill at some point in the future.
  • Bulls want to see Nordstrom close the trading day near its high-of-day price, which will cause the stock to print a bullish Marubozu candlestick and suggest higher prices will come again on Thursday. The second most likely scenario is that the stock will print an inside bar to consolidate the sudden rise.
  • Bearish traders want to see Nordstrom reject the lower area of the gap and fall back down below the eight-day EMA, which will cause another consecutive lower high to print and suggest the downtrend is still intact.
  • Nordstrom has resistance above at $23.73 and $24.89 and support below at $21.51 and $19.28.

The Urban Outfitters Chart

Like Nordstrom, Urban Outfitters is still trading in a downtrend. The stock’s most recent lower high was printed at $23.66 on May 17 and the most recent lower low was formed on Tuesday and Wednesday at $17.81.
  • The reaction just below the $18 level over the last two trading days caused Urban Outfitters to print a bullish double bottom pattern. On Wednesday, Urban Outfitters was working to print a bullish engulfing candlestick in reaction to the double bottom, which indicates a high level of strength currently exists in the stock.
  • Bullish traders want to see Urban Outfitters close near its high-of-day price, ideally above the eight-day EMA, which at press time the stock was rejecting.
  • Bearish traders want to see Urban Outfitters continue to reject that indicator and for Wednesday’s high-of-day to form the next lower high so the downtrend continues.
  • Urban Outfitters has resistance above at $20.73 and $23.23 and support below at $17.84 and $15.36.
By Melanie Schaffer
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