During the "Lightning Round" segment of Mad Money Thursday night, one caller asked Jim Cramer about BJ's Wholesale Club (BJ) : "This is an incredible stock. That was a terrific quarter. I'm a Costco (COST) guy, though."
Let's check out the charts of BJ.
In this daily bar chart of BJ, below, we can see a different pattern than many other stocks recently. Prices declined from November to the end of February and then began a strong rally. Prices were volatile in March but did not plunge to new lows. Prices have more than doubled from the late February-early March low and more gains look likely. BJ is trading firmly with only short-lived and shallow corrections.
Prices are above the rising 50-day moving average line as well as above the rising 200-day moving average line. A bullish golden cross of the 50-day and 200-day averages can be seen at the end of April which is early in the rally.
The On-Balance-Volume (OBV) line has moved up strongly with the price action and tells us that buyers of BJ have been more aggressive.
The Moving Average Convergence Divergence (MACD) oscillator moved above the zero line in March for a buy signal and now looks like it can turn higher again for a fresh outright buy signal.
In this weekly bar chart of BJ, below, we can see two years of price activity. The picture is bullish with prices above the rising 40-week moving average line. Prices broke out of a sideways consolidation pattern in May so we should see prices marked up a number of times from the $24 level or the midpoint of the pattern.
The weekly OBV line is improving and the MACD oscillator is in a bullish alignment above the zero line.
In this first Point and Figure chart of BJ, below, we used daily price data and here a nearby price target of $51 is being projected.
In this weekly close only Point and Figure chart of BJ, below, we can see a potential price target in the $72 area.
Bottom line strategy: While Jim Cramer favors COST, the charts of BJ are positive too. Traders could go long BJ on any dip into the $44-$42 area risking a close below $39 for now. $51 and then $72 are our price targets.
(Costco is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells COST? Learn more now.)
