Saturday, January 14, 2017

ULTA Ulta Salon Cosmetics Monthly Chart; Overbot; Negative Divergence

ULTA has been looking pretty ever since former Fed Chair Bernanke began pumping the stock market higher in March 2009. Young people always want to look their best in this new 'selfie' world so the cosmetics industry, especially ULTA, receives a boost. People want to be ready for a smartphone picture at anytime.

ULTA has had quite run. A negative divergence spankdown occurs in late 2013 but the stock recovered as the Fed keeps printing easy money and the age of global coordinated central banking continues. Price has come up for a matching high compared to a few months ago and the indicators are firmly negatively diverged. ULTA is likely in the process of printing a multi-year top. Do not get caught up in the hype.

Price has violated the upper band so the middle band at 208 is in play and the lower band at 129. Price is extended above the moving averages and needs a mean reversion. Price is overbot and the indicators display universal neggie d. The pink box shows how the upper trend in price is a strong trend higher but is now running out of gas and the ADX is not as high as one year ago when price was far lower. If the ADX drops to 30, 28, and say loses the 25 level, ULTA is toast.

You do not want to own this stock. If long, it is likely prudent to scale out going forward and just let that money sit to the side in cash. The upper band at 287 is on the table. With price at 261, it is likely printing a multi-year top during Jan-Mar in this 260-290 area. Perhaps young folks begin to realize appearances are not everything and personality does matter. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

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