Myer Share Price Down — Is Now the Time to Sell?

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At time of writing, the share price of Myer Holdings Limited [ASX:MYR], is down 3.08%, trading at 63 cents.

The months of March and April were very kind to the Myer share price, but it is slowly approaching a crossover of its 20- and 50-day moving averages (not the good kind):

Meyer Share Price

Source: tradingview.com

As we suggested in earlier coverage, the Myer share price would struggle to break above resistance around the 75-cent mark. This has subsequently played out and the latest data out of National Australia Bank Ltd [ASX:NAB] points towards further declines.

Related: Looking for dividend paying stocks? Matt Hibbard shares his top five picks in this report.

Myer share price could struggle over the coming weeks

The company has been on a solid run, but now may be the time to lock in gains.

Foremost among the concerns is a looming contraction in retail sales.

NAB released its cashless retail sales index today and the forecast for retail trade in April was ‘very weak’.

They made a downward revision to their forecast for ABS retail sales data for March to 0.0%.

NAB’s cashless retail sales index has been a relatively reliable indicator of ABS data:

Myer Share Price

Source: National Australia Bank

There is a potential bright spot for Myer, however, with NAB’s data suggesting an uptick for department stores.

Myer Share Price

Source: National Australia Bank

So the picture here is a bit murky.

Macro factors may work against Myer

Retail sales account for just under a third of consumption and the RBA views this as a ‘key uncertainty’.

Regardless of what the long-term damage might be, the RBA may well cut the cash rate two or more times this year.

This would provide a little more juice for the economy and free up some money for Australian consumers to spend more in the retail sector.

But this would only forestall a mid-cycle slowdown, something which has the potential to hurt retailers like Myer.

This slowdown may also have flow-on effects to the size of their dividend.

All in all, with greater downside risks present after today’s data release, Myer’s share price looks ripe for profit-taking — assuming you bought in over the last 12 months.

Put it this way, it would be a brave person that claims the Myer share price will break the 75 cent mark in the coming months.

The ABS will release their retail sales report on 4 June.

Regards,

Lachlann Tierney

For Money Morning

PS: Special 2019 report: The next generation of Aussie income super stars revealed. Hint: it’s not the banks. Click here to claim your copy now.

About Lachlann Tierney

Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest…

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