Not for the fashion timid, Chico's FAS (CHS) has broken out on the upside as the daily price chart gets some heavy starch. Can it be sustained when commensurate volume is lacking?
Let's see what the charts and indicators are saying.
In this daily chart of CHS, below, we can see prices sprint sharply higher since last Wednesday. Hard not to notice the big low to high daily ranges. There was a bullish golden cross in early September as the 50-day moving average crossed above the slower 200-day average. The slopes of these two popular averages were positive for several weeks before prices blasted higher.
The On-Balance-Volume (OBV) has struggled for months and actually declined from May through October. The OBV line doesn't have a big decline over the past six months but it does suggest that sellers have been more aggressive than buyers. The OBV line does move up sharply in November and the Moving Average Convergence Divergence (MACD) oscillator crosses above the zero line for an outright buy signal. If we only look at price we have to be bullish but if we include volume then we have to temper our enthusiasm.
The longer-term weekly chart of CHS, below, has bullish and bearish clues. First, the bulls have rallied CHS above the 40-week moving average line and above the highs of the past year. The MACD oscillator is above the zero line for an outright go long buy signal. Volume is the missing link with the OBV line moving sideways since June.
I would feel more comfortable about the long side if volume was increasing but the rally has been impressive and the pattern suggests a longer-term upside objective of $17-$18.