Burlington Stores (BURL) raced to new highs this holiday season. Can the gains continue at this rapid pace? Let's look at the charts and indicators and see what they are saying.
It doesn't take a seasoned technical analyst to figure out that shares of BURL have doubled in the past year. See the daily chart below. At the beginning of each leg to the upside you can see a price gap or price void with an increase in volume. First in January. Again in late May and another gap the just the other day. The rise this month has probably been the sharpest with prices jumping $20 in less than a month! Prices did correct from September into early November with the On-Balance-Volume (OBV) line only declining a little. This slight decline in the OBV line tells us that the longs held onto the bulk of their positions as price retreated. From January to the end of August the OBV line rose in line with the price action confirming the bull run. In the lower panel is the 12-day momentum study and you can see a bullish divergence in October as prices made lower lows the momentum indicator made equal lows for a bullish set up heading into November.
This three-year weekly chart is pretty bullish, below. Prices are above the rising 40-week moving average line but notice how the recent decline stopped short of that mathematical trend line. The weekly OBV line turned up with prices and the Moving Average Convergence Divergence (MACD) oscillator is poised to generate a new buy signal.
Bottom line: Prices have traveled a big distance in a relatively short period of time and BURL is probably going to make a sideways consolidation pattern like a flag or pennant, or a triangle before moving still higher in the weeks and months ahead. $100 is our nearest upside target for BURL.
