Urban Outfitters Inc. (URBN) has more than doubled in the past 12 months. Back in the middle of April I looked at the charts and indicators for URBN, and stated that, "URBN has crept higher but without the benefit of increased buying interest, i.e. volume. I may be old school in wanting to see volume confirm the price action but it makes me suspicious of this uptrend. If you are still long URBN or considering going long I would recommend a sell stop below $35."
Well, URBN corrected to the downside in late April and again in early May only to rally to new highs the balance of the month. Now what?
In this updated daily bar chart of URBN, below, we can see that prices are above the rising 50-day moving average line after a test of the line in early May. I pointed out the issue with slack volume in my last review of the stock and now I can point to the declining On-Balance-Volume (OBV) line from the middle of May. This is a bearish divergence when compared to the price action. The Moving Average Convergence Divergence (MACD) oscillator has rolled over the past couple of weeks and signaled another take profits sell.
In this weekly bar chart of URBN, below, we went back five years to show how far prices have traveled. URBN is above the rising 40-week moving average line. The weekly OBV line has been positive since last June but has "rolled over" the past two months. The weekly MACD oscillator is well above the zero line but its next move could be up or down.
In this Point and Figure chart of URBN, below, we can see an upside price target of $51 indicated.
Bottom line: I feel like the boy who cried wolf but URBN makes me wonder why it is still rising. Longs should, in my opinion, raise sell stop protection to just below $38 -- the May low. Maybe the Point and Figure chart will be right about the price target.