Don't Ignore This Chart!

Mind the Gaps in L Brands


A long-term downtrend, two gaps down and a move back below the falling 200-day could spell trouble for L Brands.

The stock has been quite volatile since summer, but the overall trend remains down. LB hit a 52-week low in early September, the 50-day SMA (not shown) is below the 200-day SMA, the 200-day SMA is falling and price is back below the 200-day SMA.

The stock gapped above the 200-day SMA in mid November, but this gap did not hold as the stock gapped down twice. The second gap was back below the 200-day SMA. Even though LB bounced after this gap, the bounce again failed to hold above the 200-day SMA as the stock fell sharply last week.

The indicator window shows the PPO (5,30,5) turning down over the last few days and moving back into negative territory. The move below zero means the 5-day EMA is back below the 30-day EMA. Thus, it looks like price is turning back down and the bigger downtrend is resuming.

On Trend on Youtube

Available to everyone, On Trend with Arthur Hill airs Tuesdays and Thursdays at 10:30AM ET on StockCharts TV and repeats throughout the week at the same time. Each show is then archived on our Youtube channel.

Topics for Tuesday, December 11th:

- Arthur Hill, CMT

Senior Technical Analyst,

Book: Define the Trend and Trade the Trend
Twitter: Follow @ArthurHill

Arthur Hill
About the author: , CMT, is the Chief Technical Strategist at Focusing predominantly on US equities and ETFs, his systematic approach of identifying trend, finding signals within the trend, and setting key price levels has made him an esteemed market technician. Arthur has written articles for numerous financial publications including Barrons and Stocks & Commodities Magazine. In addition to his Chartered Market Technician (CMT) designation, he holds an MBA from the Cass Business School at City University in London. Learn More
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