MGLU3 or BHIA3? Retail stocks should be invested

Companies in the retail trade sector recorded not-so-pleasant falls on the stock market in 2023. Two stocks in particular stand out among these losses: Magazine Luiza (MGLU3) and Casas Bahia (BHIA3).

From the beginning of the year to the close of trading on October 23, BHIA3 collapsed 77.9%, and MGLU3 lost almost 45%.

The move in 2023 is somewhat surprising, as the decline in the Selic index that began in August was expected to see a bullish move for these securities due to positive historical growth. the correlation of returns at the time of the interest rate cut.

However, other factors are weighing against retailers, such as the recent increase in rates on forward interest (DI) contracts, increased competition from foreign e-commerce companies and difficulties in achieving results.

In addition, companies in the retail sector are generally suffering from a restrictive macroeconomic scenario with the Selic rate still at a high level, which directly affects their bottom lines, be it through debt labeling or consumption restrictions.

Now, on the eve of the release of the results for the 3rd quarter, a new picture can be drawn in the coming weeks: for better or for worse. In other words, investors will look at balance sheets as a magnifying glass, as a way to set new goals for stocks.

Until that happens, the market will not forgive the two retailers. So now they don’t have the benefit of the doubt. It is no coincidence that both stocks are in a downtrend in the short term.

So much so that Casas Bahia shares hit an all-time low last week. Luiza magazine, in turn, is running at its lowest point in November 2017.


For comparison, at historical highs, VIIA3, formerly known as BHIA3, closed at 20.62 reais on 07/21/2020; and MGLU3 for R$ 26.41 on 11/9/2020.

This Monday (23) Casas Bahia rose 1.92%, gathering 0.53 R$while Luiza magazine fell 1.95%, 1.51 R$.

At the same time, Leandro Petrakos, director of research and partner of the analytical house Quantzed, made a request InfoMoney outlook for two assets based on technical analysis. Check it out below:

Technical Analysis: MGLU3

Starting with Luiza magazine, the weekly chart below highlights that the stock has lost an important turning point: the old support at 2.00 reais.

“When prices lost this level, the sales movement accelerated and prices reached the range of 1.50 reais, that is, a drop of 25%,” the expert notes.


Weekly schedule: January 22 – October 23

MGLU3;  BHIA3;  technical analysis;  graphical analysis;  swing trading;  retail trade
Source: Nelogica. Development: Leandra Petrokas

Petrakos adds that now that prices are very far from the 9- and 20-week moving averages, there is “a greater chance that the asset will rebound before continuing to fall.”

“Actually, we can work with the idea a candle exhaustion last week: a wide bar, with an open near the high, a close near the low, after a sequence of negative bars,” he reveals.

Therefore, if the rebound scenario is confirmed, resistance at 1.86, 2.00 and 2.30 reais can be tested in the coming weeks.


Meanwhile, on the daily schedule – see below – immediate resistances are at 1.67 and 1.74 reais.

Weekly schedule: May to October/23

MGLU3;  BHIA3;  technical analysis;  graphical analysis;  swing trading;  retail trade
Source: Nelogica. Development: Leandra Petrokas

Learn more:

Technical Analysis: BHIA3

Moving on to Casas Bahia, the asset, as in the case of Luiza magazine, is operating in an “obvious downward trend”, but with an aggravating factor: the share is in the vicinity of the historical low reached last week, at R$ 0.49 .


That downward movement accelerated after the company’s September IPO fell short of expectations, which should have raised about 1 billion reais, but ended up with 622.9 million reais.

As a result, in the session after the final announcement of the offer, the shares fell by 30% to 0.90 reais. And since then, the stock has not recovered from the blow.

“Since we have no price memory and no history of quotes below R$0.49, the only way to identify support for the asset would be through Fibonacci predictions. In this sense, we will have R$0.43 and R$0.31 (targets of 100% and 161% of the last downtrend) as possible stops if the downtrend continues,” he elaborates.

Weekly schedule: March 22 – October 23

MGLU3;  BHIA3;  technical analysis;  graphic analysis;  swing trading;  retail trade
Source: Nelogica. Development: Leandra Petrokas


But there is one point that needs to be emphasized. According to him, the eventual upward shift of the 9-period moving average will be a sign of buying power and will open up space for prices to reach the 20-day moving average of 0.64 reais.

Therefore, he adds, while there is a rebound inside the downtrend, which is “far from a reversal.”

This is related, as Petrakos argues, to the principle that a trend begins with a reversal; therefore, “to form a bullish reversal, an asset must represent a sequence of four steps: the formation of a bottom, the formation of a top, the bottom above the previous bottom and the breakout of the last top.”

“In the case of BHIA3, we still have a sequence of tops and bottoms at lower levels, so a potential reversal of the trend still takes time,” he concludes.

Daily schedule: June to October/23

MGLU3;  BHIA3;  technical analysis;  graphic analysis;  swing trading;  retail trade
Source: Nelogica. Development: Leandra Petrokas

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