Stock Chart ULTA

Stock Chart Analysis ULTA
Ulta Salon, Cosmetics & Fragrance, Inc.(Public, NASDAQ:ULTA)

I mentioned on twitter today how I was noticing retailers at the high of day in spite of the market hitting new lows for the day. I also noticed this same behavior last week on a weak day. Usually when you see many stocks in a sector hitting highs together, it signals an institution or fund buying a basket in the group. While this wasn't enough of a reason for me to try and fight the trend day down, I decided to watch some retail names later in the afternoon. Later in the afternoon, I noticed some retailers continuing on the earlier strength, but the markets still looked ugly. In the end, many of the retailers backed off the new highs, but held up much better than the other sectors. I decided to enter into ULTA late in the day as a swing trade due to a few positives in the charts and despite the negative outlook in the general markets.

ULTA recently cleared a lateral consolidation that could also qualify as the handle in a cup and handle base formed from January through June. It cleared the base on a small uptick in volume before surging on a gap a few days later. It is now in the process of testing the breakout area and is becoming oversold as it begins the test. The 20 and 50-day moving averages are both over the 200 day moving average and sloping higher. ULTA was able to find support on the 50-day MA last Friday, and cleared that candle today. While ULTA may still have some backing and filling to do, there was enough of a chance that it would hold this area as support combined with the positive candle today, that I took the trade. With the markets threatening a deeper pullback, I will be very aggressive in taking profits if the trade works in my favor. As always, please follow up with your own due diligence if you are considering a similar trade.


Good Trading,

Joey