2 Historical Trends Nordstrom, Inc. (JWN) Stock is Bucking

Nordstrom, Inc (JWN) and the SPDR S&P Retail ETF (XRT) are tanking on sector-wide turbulence

Jan 5, 2017 at 10:42 AM
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Retail stocks are reeling after a pair of big names reported weak holiday sales, creating sector-wide headwinds. As such, the SPDR S&P Retail ETF (XRT) is down 2.5% at $44.03. That said, per the chart below, the exchange-traded fund may have found a foothold atop the $44 level, which has alternated between support and resistance for the past six months.

xrt daily jan 5

Digging deeper into the retail sector, one interesting name taking a tumble is Nordstrom, Inc. (NYSE:JWN). The stock has plummeted 9.5% to trade at $44.28, which is unconventional from one historical perspective. Specifically, the shares have tended to outperform in the first year of presidential cycles. JWN's average annual gain during the initial year of the past three cycles -- 2005, 2009, and 2013 -- is a brow-raising 86%.

Technically, something unusual has occurred, too. For the past few sessions, the retail stock had been consolidating atop its 160-day moving average, but has now gapped well south of it. Historically, this trendline has been a strong level of support, boosting the shares four of the last five times they've touched it in the past three years, with an average five-day gain of 3.3%. As support has given out, JWN is exploring territory not seen since August, and has fallen off dramatically from its mid-November highs near $63.

Not surprisingly, 13 of 19 analysts rate the stock a "hold" or worse. Along similar lines, over one-fifth of its float is sold short, which would take eight sessions to cover, at JWN's average daily trading rate. It's possible some of these short sellers may have hedged their bearish positions with protective calls, too, given the fact that more than four calls have been bought to open for each put over the last four weeks at the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX).

Speaking of options buying, it's a good time for short-term speculators to strike. Nordstrom, Inc. (NYSE:JWN) sports a Schaeffer's Volatility Index (SVI) of 38% -- in the bottom quartile of its annual range, hinting at muted volatility expectations. More than that, the stock's Schaeffer's Volatility Scorecard (SVS) of 92 suggests the shares have made bigger moves than the options market has priced in over the past year.

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