Burlington Stores (BURL) has doubled in price in the past 12 months -- pretty impressive, but are the best gains in the rear view mirror? A weakening technical picture suggests we may want to nail down some profits.
In this one-year daily chart of BURL, below, we can see that prices have traveled north from below $45 back in January to briefly over $90 in November -- not a bad mark up. Prices are above the rising 50-day moving average line and the rising 200-day average line. The 50-day average is not that far away and could be tested in the days ahead. Why? There are two clues that may be foreshadowing weakness.
First the On-Balance-Volume (OBV) line did not make a new high with price in November. This tells us that buyers were not that aggressive despite the new highs. Second, the Moving Average Convergence Divergence (MACD) oscillator crossed to the downside above the zero line. A bearish cross in positive territory for the MACD should be interpreted as a liquidate longs or take profits signal.
In this three-year weekly chart of BURL, below, we can see that prices are above the rising 40-week moving average line. Like the daily OBV line the weekly OBV line did not make a new high with prices in November. In the lower panel is the 12-week momentum study, which shows a bearish divergence between the higher price highs and weaker momentum readings. A slower pace for the advance can be a caution flag on the rally.
Investors in BURL should check their cost basis and consider protecting profits.