Ulta Looks Ready for a Reversal

 | Dec 04, 2013 | 9:00 AM EST  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

ulta

I'm currently stalking a buy side setup in Ulta Salon, Cosmetics & Fragrance (ULTA), though I have not yet seen a trigger firing off to suggest that I place my bet.

Let's start by going over the trade parameters. I'm watching two Fibonacci price clusters of support. As a general rule, these key levels constitute groupings of at least three Fibonacci price relationships, coming together within a relatively tight range. In this case we are looking at potential support between $123.75 and $124.38, and between $122.27 and $122.66. These cluster zones include Fibonacci price retracements, price extensions and projections.

Ulta Salon (ULTA) -- Daily
Source: Dynamic Trader

Now, besides the price support the stock is currently testing, I'm also looking at some timing parameters that suggest a possible low and a coming reversal. You can see on the daily chart the coincidence of at least four time relationships that come due between Dec. 4 and Dec. 6. When a stock is trading lower into a cluster of timing relationships, we look for a possible reversal of that downtrend.

Bottom line: Price and time relationships are telling us to stalk Ulta for a possible low in the next couple of trading sessions. If an entry is triggered, I will take a trade and define my maximum risk below the $122.27 support level. The minimum risk is typically defined as being below the low hit prior to a buy trigger firing off. If this scenario starts to play out, a general minimum target to shoot for is at the $135 area.

I will consider myself wrong, and will back off the trade, if both support clusters are taken out.

For more information on trade triggers, please refer here.

Columnist Conversations

While there a group of stocks that are the largest creators of news and headlines, one company gets fewer head...
After markets meet extensions of prior swings on the upside they are vulnerable to a deeper downside correctio...
Markets stage nice sell-off to begin trading week as S&P 500 2,000 continues to proves to be tough level t...
It's like somebody yelled fire in all three at the same time.

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.