| May 18th, 2021 Footwear Retailer Trending Up Dear Reader, Yesterday, we looked at a Monthly Price Chart of Canadian Pacific Railway, noting that the stock’s 1-Month Price is trading above the 10-Month SMA. For today’s Trade of the Day e-letter we will be looking at a Moving Average Convergence/ Divergence (MACD) chart for Foot Locker, Inc. stock symbol: FL. Before breaking down FL’s MACD chart let’s first review what products and services the company offers. Foot Locker, Inc., through its subsidiaries, operates as an athletic footwear and apparel retailer. The company engages in the retail of athletic footwear, apparel, accessories, equipment, and team licensed merchandise under the Foot Locker, Lady Foot Locker, Kids Foot Locker, Champs Sports, Eastbay, Footaction, Runners Point, and Sidestep brand names. MACD Indicator confirms Price Momentum The FL daily price chart below shows that FL is in a price uptrend as the 12/26 day MACD line (black line) is above the 9-Day EMA (purple line). The Moving Average Convergence/ Divergence chart is shown below the daily price chart. MACD uses moving averages to create a momentum indicator by subtracting the longer-term moving average from the shorter-term moving average. The MACD is calculated by subtracting a stock’s longer term 26-Day Exponential Moving Average (EMA) from its shorter term 12-Day EMA. This creates the MACD line. MACD ‘Buy’ Signal The 9-Day EMA line functions as a buy/sell ‘trigger’. When the 12/26 Day MACD line crosses above the 9-Day EMA line it indicates positive momentum and higher prices for the stock. When the 12/26 Day MACD lines crosses below the 9-Day EMA it indicates negative momentum and lower prices for the stock. MACD is more of a leading indicator than a moving average cross over which tends to lag price movement. MACD Histogram shows Acceleration of Momentum Also included in a MACD chart is the histogram bar graph. This portion of the chart helps to illustrate the distance between the 12/26 Day MACD and the 9-Day EMA. When a crossover initially occurs, the histogram’s bar will be near flat as the two indicator lines have converged. As the lines begin to separate, the bars grow in height, indicating a widening gap and acceleration for the stock’s momentum. When the histogram’s bars begin to shrink this indicates a narrowing of the gap between the 12/26 Day MACD and the 9-Day EMA and a slowing of the stock’s momentum. When the gap between the two indicators begins to narrow, this typically indicates a crossover of the indicator lines could happen soon. 
Buy FL Stock As long as the 12/26 Day MACD line remains above the 9-Day EMA, the stock is more likely to keep trading at new highs in the coming days and weeks. Since FL’s bullish run is likely to continue, the stock should be purchased. Our initial price target for FL stock is 72.40 per share. | 
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