Kroger is at a 'key technical juncture' after its worst day in six months, market watcher says

Disappointing sales and weak guidance sent Kroger spiraling in its worst daily performance in six months.

Its one-day sell-off has its stock at a "key technical juncture," Matt Maley, equity strategist at Miller Tabak, told CNBC's "Trading Nation" on Thursday.

Kroger's move above $29.50 in late June marked a break above its old resistance level, says Maley. That level has since acted as support for its stock.

"In the spring, it made a nice higher low and then in the summer it made a very nice higher high, and when it made that high, it broke above its trendline going back to the 2016 highs," said Maley. "This decline, especially with [Thursday's] move, has taken it right back down to that line."

How it moves next will determine how much technical damage it suffered after Thursday's sell-off, says Maley.

"If it breaks below that line in any kind of significant manner, it's going to be quite negative for the stock. If, however, it can hold the line, thus giving us another higher low, it's going to be quite positive. So it's kind of a coin flip right now," he said.

A move below around $28 would represent a break of that trendline.

Mark Tepper, CEO and president of Strategic Wealth Partners, sees fiercer competition from retail and tech giants displacing Kroger's industry leadership in the long run.

"This is definitely one of the most dominant players within the grocery space but there's way too much competition," Tepper said Thursday on "Trading Nation."

"They're not only battling the mom-and-pop stores anymore, but now they have to battle Amazon, Walmart, Target, and those companies are absolutely killing them."

Amazon flexed its muscles in the grocery store space when it announced its acquisition of Whole Foods in June 2017. Walmart has expanded its own grocery footprint this year with increased investment in its delivery service website Jet.com.

Kroger tumbled 10 percent on Thursday to $28.58, its lowest close since late July. It remains 4 percent higher for the year.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's “Closing Bell (M-F, 3PM-5PM ET).   In addition, he contributes to CNBCand CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

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