The stock price of Burlington Stores Inc. (BURL) has tripled over the past three years. I am impressed. I pass by one of its stores about two miles from my home and my unscientific observation of the parking lot would suggest they could do better. Again, an unscientific observation of just one store. The stock price has soared but a reversal may be in the forecast.
Let's check out the charts and indicators on this name discussed by Jim Cramer on Mad Money Wednesday evening.
In the daily bar chart of BURL, below, we can see a rally from the October low. Over the past seven months dips to the 50-day moving average line were buying opportunities and prices did not break the line. This month the price action broke the 50-day line for several days before rebounding above it. That is not the only recent change. The daily On-Balance-Volume (OBV) line turned down in the middle of August and tells us that sellers of BURL have become more aggressive.
In the lower panel we can see that price momentum slowed from June to August to early September, which is a bearish divergence when compared to the price chart which shows higher highs. All of these clues suggest weaker prices for BURL.
In the weekly bar chart of BURL, below, we can see a mixed picture. Prices are above the rising 40-week moving average line. The weekly OBV line shows a small peak at the beginning of September. More data is needed but aggressive buying may have peaked.
In the lower panel we can see that price momentum has slowed from the beginning of this year even though prices have continued to rise.
In this Point and Figure chart of BURL, below, the software has looked at the price action and determined it was distribution and has projected a downside price target of $135.04.
Bottom-line strategy: The price chart of BURL is still pointed up but beneath the surface I see weak indicators. If you are long I would recommend bringing sell stops closer to the price action and I would be worried about a break of $150.