The stock price of Burlington Stores (BURL) has had a good run in fact I would call it a great run over the past three years, but a subtle shift is underway. Prices have made new all-time-highs over the past few months but volume has not expanded and price momentum is slowing.
The price chart is still pointed up but beneath the surface we have a few technical reasons to grow cautious and maybe take some money off the table, so to speak. Let's move up and down the aisles of the charts and indicators before we get to the check out counters.
In this daily bar chart of BURL, above, we can see that prices recently successfully tested the rising 50-day moving average line. BURL is above the rising 200-day moving average line and the last time prices got near the line was in early November. The On-Balance-Volume (OBV) line moved up with the price action from May to September. A rising OBV line happens when the volume of trading is heavier on up days which is a sign of aggressive buying. Since early September the OBV line has been mostly neutral to slightly positive. In the lower panel is the 12-day momentum study which shows a bearish divergence from November to March. Prices make higher highs in March versus November but the rate of acceleration or momentum slows. Momentum is a leading indicator and it can slow in an uptrend because investors may be scale up sellers or because a stock is approaching resistance or it is not as attractive at the higher values.
In this weekly chart of BURL, above, we can see the strong price gains of the past three years. Prices are above the rising 40-week moving average line. The weekly OBV line has not made a new high in the past seven months even as prices have made new highs -- a divergence. In the lower panel is the trend-following Moving Average Convergence Divergence (MACD) oscillator which looks like it is poised to cross up or down -- it's on the fence. A cross to the downside would be a signal to take profits and a cross to the upside would be a fresh go long signal.
In this point and figure chart, above, we can see the rally in BURL with some periodic pullbacks. BURL is in an up column (Xs) but a pullback or correction might carry down as low as $84 if the width of the current consolidation was projected downwards.
Bottom line -- if you are long BURL -- great! You have done well, but now I think you should consider protecting your profits and maybe take some money off the table. A close below $90 would create a lower low on the chart and break the 50-day moving average line.