Burlington Stores More Bear Than Bull

 | Oct 23, 2017 | 3:38 PM EDT
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The share price of Burlington Stores (BURL) has been crisscrossing the 50-day and 200-day moving average lines in recent months, while the longer-term picture shows a topping pattern the past twelve months. Let's take some of the charts and indicators into the changing room and see what fits.

In this daily bar chart of BURL, below, we can see that buyers for BURL have appeared in the $85-$80 area in January and February and again in June and August. This area has acted as support a couple of times but I have my doubts that it will survive the next test. BURL is holding the slightly rising 50-day moving average line and testing the underside of the cresting 200-day line. The On-Balance-Volume (OBV) line has move sideways from December to late August suggesting a balance between buyers and sellers. In September the OBV line rose with the firmer price action and indicating more aggressive buying but the OBV line turned lower this month. The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the downside in October for a take-profits sell signal, and is close to moving below the zero line for an outright sell signal.

In this weekly bar chart of BURL, below, we can see a possible head and shoulders top formation the past twelve months with a neckline at $80. Prices are below the cresting 40-week moving average line and the weekly OBV line has been weakening the past five months. The weekly MACD oscillator is hugging the zero line now which suggests that BURL could go up or down.

In this Point and Figure chart of BURL, below, we can see a bearish price target of $78.23 which would break the $80 neckline.

Bottom line -- because the weekly bar chart of BURL shows what I believe is a top pattern I would cautious about the long side of BURL.

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