Macy's delayed its Q3 earnings release, revealing an internal investigation into an employee who allegedly hid hundreds of millions of dollars in expenses.
Shares of Macy’s, Inc. M are trading lower on Monday, and there is a good chance that the downtrend will continue.
This is why it is our Stock of the Day.
A person who was responsible for small package delivery expense accounting made intentional “erroneous accounting accrual entries.” As much as $154 million may have been hidden. The activity occurred between Q4 2021 and the current third quarter.
Macy's said there was “no indication that the accounting error had any impact on the cash management activities or vendor payments.” It also said the employee is no longer with the company.
Read Also: Why Macy’s Stock Is Falling
The stock was looking technically vulnerable prior to the news coming out. As you can see on the chart, it had run into resistance again around the $16.40 level. Stocks tend to sell off after they hit resistance. This is what happened with Macy's in mid-October and early November.
When a stock trends higher, there aren't enough sellers to fill all the buy orders. As a result, buyers are forced to bid successively higher prices to attract sellers into the market, forcing the stock into an uptrend.
When resistance is reached, the uptrend ends. There are more than enough sellers to fill all of the buy orders. Buyers can acquire all of the shares they wish to without pushing the price any higher.
Sometimes, some investors and traders who create resistance with their sell orders become concerned. They know the buyers will go to whoever will sell at the lowest price.
They fear that other sellers may lower their asking prices, prompting them to do the same. This behavior often triggers a chain reaction, with more sellers reducing their prices in response.
It results in a snowball effect that can push the price lower.
This is what happened the last two times Macy's reached the $16.40 level, and it may be about to happen again.
Read Next:
Photo: Shutterstock
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
