Signet Jewelers Inc. (SIG) has been making a large base pattern on the charts and could be poised for a significant price advance in the months ahead. The company has been making significant share buybacks, as Jim Cramer observes here. Let's put aside the mandrel and pull out the charts to see if things are "sized right" for a rally.
In this daily bar chart of SIG, below, we can see a base pattern or reversal bottom pattern the past year. There is a low in early April and a retest in early May. In June SIG gapped to the upside on a big expansion in volume. Prices are above the rising 50-day moving average line and the 200-day line. The slope of the 200-day line turned positive this month. In July we can see a bullish golden cross as the 50-day average line moved above the 200-day average. Prices made their low in early April but the On-Balance-Volume (OBV) line made its low in the middle of March. The OBV line shows a bullish trend and tells us that buyers of SIG have been more aggressive than sellers. The trend-following Moving Average Convergence Divergence (MACD) oscillator has been above the zero line since late May and has recently crossed to the downside for a take profits sell signal.
In this weekly bar chart of SIG, below, we can see a turnaround in the making. SIG had a long decline from late 2015 to early 2018. Prices rallied up above the declining 40-week moving average line and the slope of the line has started to turned positive. The weekly OBV line made a low in the middle of 2017 and a higher low in April of this year. The MACD oscillator on this longer time frame turned bullish in July and is still pointed up but has narrowed in recent weeks.
In this Point and Figure chart of SIG, below, we can see a big upside price target of around $130. A trade up at $71.56 will be a breakout on this chart.
Bottom line strategy: SIG could pull back or dip in the near-term. A decline back to $60 could be a buying opportunity with a stop below $55. A rally above $71.56 will be a chart point where additional longs could be bought for a longer-term target of $130.