Is Gap oversold as the company prepares to announce results?

By:
on Mar 3, 2022
  • Gap shares have been declining to find the current low of $14.57.
  • The share price may have hit a bottom.
  • The share price is expected to reverse the trend as the company announces results.

Gap Inc. (NYSE:GPS) will announce Q4 and annual results at 1:15 p.m. Pacific Time on March 3. The clothing and accessories retailer is expected to report growth in revenues in line with earnings trends reported this season. The Achilles heel for the company, however, is cost control. The supply chain and logistic challenges of the last year can be expected to feature in the company’s performance. Investors, however, need to consider more than fundamental performance.

Gap Inc. shares oversold

Source – TradingView

Share price analysis indicates that Gap Inc. may have bottomed out at the share price of $14.57. The price is lower than all the moving averages. MA 50 is at $25.16, indicating a long-term upward trend against a short-term declining trend depicted by the MA 20 at $18.43 and MA 10 at $16.29.

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A reversal in the price is signaled by both the RSI and MACD momentum indicators. While MACD remains in the negative, a convergence indicates that the bearish momentum may be coming to an end. This signals to the market that the share price may have bottomed out, and it is time for a reversal in the trend.

The reversal in momentum is confirmed by the RSI which is currently at 30.46. At this level, the RSI indicates that Gap Inc. shares are oversold, pointing to the possibility that the share is trading below the intrinsic value. Consequently, the share price would be expected to reverse this declining trend.

Summary

As Gap prepares to announce Q4 and annual results, the market expects earnings growth in line with recent trends. Analysis of the share price indicates that Gap Inc. is oversold. Share price expected to reverse momentum.

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