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

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.


Lachlann Tierney is a writer for Money Morning and has been investing for nearly a decade. With an MSc 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 their money wisely. Recently, he has been working with Phil Anderson and Terence Duffy. They have three publications:

Phil Anderson’s Time Trader
Cycles, Trends & Forecasts
Money Morning Trader


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