It was a long time ago we saw the giant Hennes & Mauritz (HMB SS) surprise positively. Sales figures out today were better than expected resulting in the share price taking a big jump, currently up 12%.

One data point is probably not signalling all is well, but in the case of HM, the psychology has gone from very optimistic to extremely pessimistic in 2 years. This psychological setup creates interesting trading opportunities.

The negative trend is still very much in place, but note how we are approaching the 200 day average rapidly. HM has not traded properly above the 200 day average since topping out in 2015. 140ish is the 200 day average which is first stop. Next big resistance is to be found at the 150 level.

As HM has been imploding over past years, the giant Inditex has continued outperforming on a relative basis. The relative share price performance has been one way traffic. Note the uptick today.

Why is HM interesting? It is a big company (still), it is followed by many analysts and the stock is trading with good liquidity. Out of the 31 analysts in Bloomberg only 3 have a buy rating (green) on the stock.

As the stock has been imploding, more and more analysts have been joining the bearish camp while at the same time the bullish recommendations have been simply evaporating. If HM is cheap or not we leave to pundits to decide, but from a purely trading perspective, this will be a name to keep a close eye on.

Fundamental shorts are feeling the pinch today and the exit could prove to be very narrow. Image showing various analysts stance on HM (green buy, red sell, yellow neutral).

Source: charts by Bloomberg