There are three main approaches to security analysis. There is the fundamental approach that looks at sales, earnings, management and so forth. There is also the technical approach that zeros in on price and volume. Lastly, there is the quantitative approach that crunches the numbers on a company and generally comes up with a rating.
Burlington Stores, Inc. (BURL) was downgraded by TheStreet's Quant Ratings service today. This downgrade comes two days after BURL closed below its 200-day moving average line -- interesting how this dovetails with the lower quantitative ranking. Let's check the charts and indicators to see what they might have in store for BURL in the weeks ahead.
In this daily bar chart, above, we can see that BURL closed below the now declining 50-day moving average line as well as the flattening 200-day moving average line. Prices broke below the lows of May and April, which turned the trend from up to down. The chart shows some support in the $85-$80 area from January and February.
The daily On-Balance-Volume (OBV) line turned low in May, indicating that for almost two months sellers of BURL have been more aggressive. The Moving Average Convergence Divergence (MACD) oscillator recently moved below the zero line for an outright sell signal.
In this weekly chart of BURL, above, we see more bearish signals. BURL has made a pretty impressive advance over the course of the past three years but it closed below the rising 40-week moving average line. The weekly OBV line has been neutral or flat the nine weeks and this might be considered a serious bearish divergence versus the price action which has been positive. The MACD oscillator on this time frame is above the zero line but it has crossed to another liquidate longs sell signal.
In this Point and Figure chart, above, we can see how prices broke lower from the trade at $90, which was a new low for the move down. The next chart low to break is at $80 and this could open the way for a much deeper decline, which on this chart projects possibly to $59.
Bottom line: BURL can rebound after its recent slide but the $90-$95 area is probably going to act as resistance. Further, declines appear possible and perhaps likely if $80 is broken.
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(Our Quant Ratings service assesses stocks using a proprietary computer model that runs a variety of factors through quantitative and technical analysis. Ratings do not necessarily reflect the opinions of Jim Cramer or other columnists, who may use different criteria to grade stocks.)