Buyer beware. Kroger (KR) may be a great place to shop in, but that doesn’t mean the long side of the stock is attractive here. Rotate the stock on the shelves and check the charts and indicators before making a decision. Here’s my view.
In this daily chart of KR, below, we can see that it has mostly been in a downtrend for the past twelve months. There was a good October-to-December rebound, but the advance was unable to break the prior July high and turned down again. Prices have been testing the October lows this month, and while volume has picked up, buyers do not look like they have turned aggressive, as the On-Balance-Volume (OBV) line is still flat.
KR is still below the declining 50-day and the declining 200-day moving averages. The 12-day momentum study is not yet showing us a bullish divergence, which might foreshadow a rebound in the weeks ahead.
In this weekly chart of KR, above, we see a major top formation with a neckline at $34. Prices broke below the neckline last year and had a rebound rally before sinking again. KR has been below the declining 40-week moving average line since early 2016.
The weekly OBV line suggests that sellers of KR have been more aggressive since late 2015, and this is certainly not good for stock prices. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish mode below the zero line. The price action looks like a bear flag, or bear pennant, formation the past few weeks — not good.
In this Point and Figure chart of KR, above, we can see how $29 has been support, but that a trade at $28 will be a breakdown and open up the possibility of a deeper decline towards $22.
Bottom line: Check your coupons and bring your own bags to be green when you shop at KR, but investors may want to wait for better prices in the weeks and months ahead.