We last checked in on Coach (COH) in the middle of April, giving a bullish outlook and strategy: "Traders and investors could use the recent pullback to the $40-$39 area to buy or go long COH. I would use a sell stop below $38. Our upside price target is $55."
In this updated daily bar chart of COH, below, we can see the August to April base pattern. Not long after our bullish report on Real Money, COH exploded on the upside, soaring quickly from $39 to $46. Prices moved slowly higher -- from $45 to near $49 in the past three months. The rising 50-day moving average has been positive since early March and the slope of the 200-day moving average line turned positive in May.
The movement of the On-Balance-Volume (OBV) line is interesting in that the line started to improve in late October, well before the breakout. Volume tends to lead prices. In the past three months, as COH has inched higher the OBV line has been steady. The Moving Average Convergence Divergence (MACD) oscillator has stayed above the zero line since February, but has declined to near the zero line recently. Renewed price strength in COH should keep this indicator positive.
In this three-year weekly bar chart of COH, below, we can see a large base pattern with a "neckline" at $44 (use your imagination to draw a horizontal line across $44). Prices rallied sharply in late April to break the neckline. Prices are above the rising 40-week moving average line. The weekly OBV line started to show aggressive buying in late 2016. The weekly MACD oscillator is well above the zero line, but has narrowed to a possible crossover signal.
In this Point and Figure chart of COH, below, we can see a strong-looking base pattern, with a breakout at $42.93. This chart shows a potential upside price target of $55.89, a little higher than our forecast in April.
Bottom line: The price of COH might edge lower to around $45, but the overall chart picture is positive. Investors should continue to hold longs, as we still look for our $55 price target to be reached. A close below $43 would prompt a reappraisal.