Option Investor
Market Updates

The Cash Register Isn't Ringing

Printer friendly version

Safeway, the nations third largest grocery chain, reported second-quarter earnings in line with expectations, but the stock is still 7% today. The decline stemmed from concerns about future growth due to shrinking margins and declining same store sales.

Safeway Point and Figure Chart

Supply took control of the picture when the bullish support line was broken back in January, and Safeway (NYSE:SWY) has continued lower since. The May sell signal gave a bearish price objective of 40, and today's $3.41 drop puts the stock closer to that target. $40 is also the area where Safeway consolidated this time last year to stop its decline.

NCR Point and Figure Chart

If retailers are selling less, their cash registers are being used less, and they have less money to buy new ones. At least that's what NCR is saying. Second quarter earnings are expected to come up 40% shy of forecasts. It wasn't so much cash register sales, as much as postponed orders for data warehouses that store inventory information. Either way, supply is now firmly in control of the stock. NCR tried to crack through resistance at $49 back in early May, but that attempt was quickly turned back. One last attempt was made in June, but failed. Now it could be quite a while before the cash register rings, or NCR tests $49.

Jeffrey Canavan
Assistant Analyst

Intraday Update Archives