ULTA trade ideas
ULTA due for a correctionULTA is clearly overbought at this point in time. Now is certainly not the time to go long on this equity.
Key Points:
1. Overly bullish sentiment
2. RSI on weekly is around 85 - probably the highest in it's history.
3. RSI on daily has been hovering dangerously around 80 for quite some time.
4. There is no clear RSI divergence from price at this time.
5. Jaws of the Aroons are well open on most time frames.
Issues :
Playing with RSIs are fraught with risk. They can be very deceptive. However the statistical probability is for a corrective fall in price. How much? Impossible to say. Shorting a bull market is far more risky than going long at a pullback in bull market. If one was adopting an acceptable high risk strategy, a stop-loss would have to be pretty wide. I speculate that the correction could be back to around 220, over the next 15 weeks. This could be in two stages. The first correction may be minor.
Overall though, ULTA is 'designed' for a long . I'd be looking to go long at the next major pullback and have set up alerts to catch it e.g. if price collides with 100 or 200EMA.
Long ULTA Short DK YTD 185%ULTA is still rising, albeit on lower volume in recent time. The beauty store provider is still generating strong earnings growth with a 3 Year E.P.S Growth Rate of 25% and an E.P.S % Chg (Last Qtr) of 39%. This is accompanied by a 3-Year Sales Growth Rate of 21% and a Sales % Chg (Last Qtr) of 24%. This shows that an increase in sales is driving E.P.S growth, which is an important factor. Whilst ULTA has experienced lower than average trading volumes since the beginning of June 2016 the relatively small free float of 61 million shares means that the volume is still sufficient to drive the price higher. Trading at all-time-highs doesn't seem to bad when it's doing so on a P/E of 48, a modest premium for a growth stock of this calibre.
Delek U S Holdings Inc (DK) is a US oil refiner, operating largely in southern US states and is doing so at a loss. The stock is down 51% YTD, sales are declining (3-Year Sales Growth Rate -15%, Sales % Chg (Last Qtr) -4%) and earnings are too (3 Year E.P.S Growth Rate -46% and E.P.S % Chg (Last Qtr) -378%). The latest quarterly earnings report was headlined by a slightly improving cash balance and an announcement of cash proceeds from tax refunds and business interruption proceeds, which does not demonstrate improving business fundamentals. Improving the cash balance is important to Delek, considering their debt to equity is around 76% at the most recent report.
With a P/E ratio of 80 and the stock trading around $12, there is certainly plenty of downside remaining.
$ULTA - Weekly R3??? SHORT THIS WITH TWO HANDS - BUT, buy time.. Rejected at R3 and 1.272 and way overbought. TOAST
Bearish Look2 Gaps (Small and Large) which have yet to see a retest. Also rejected at midline of uptrending channel
Bearish candles on Weekly and Daily chartsULTA is in an obvious up trend on the weekly chart. Sort of sideways on the daily chart with an RSI making lower lows and lower highs.
But if you put a lot of stock in candle formations then you might be willing to risk some money to the downside. Bearish formation in Friday's candle on the daily (engulfing candle) within a one on the weekly (upside down hang man).
No position for me but next week I will be watching the price action. There might be a post earnings (last Thursday) move on the horizon this week. Exhaustion could get a pullback below the trendline if there is a reversal move off these recent highs.
Pick Your Reason to Buymultiple cup and handle breaks, Measured Move higher, horizontal resistance break. How you define a mosaic
