In his "No-Huddle Offense" segment of his Mad Money program Tuesday night, our own Jim Cramer highlighted a few stocks he still likes in this market. He said Canada Goose Holdings Inc. (GOOS) sold off hard Tuesday after a secondary offering, but the weakness was a gift for a stock that's up 99% for the year and still has a lot more room to run. Cramer noted that Canada Goose just reported a huge 20-cents-a-share earnings beat. Let's see if the charts are strong too.
In this daily bar chart of GOOS, below, we can see that prices have not quite tripled in the last 12 months - from close to $25 to a few dollars short of $75. Prices broke out to new highs earlier this month after more than four months of sideways action. The rising 200-day moving average line was tested in late October before the rally to new highs. The daily On-Balance-Volume (OBV) line shows an overall positive trend the past year and recently and briefly made a new high for the move up. The trend-following Moving Average Convergence Divergence (MACD) oscillator is above the zero line in bullish territory but is close to crossing to the downside to a take profits sell signal.
In this limited weekly bar chart of GOOS, below, we see a mixed picture. Prices are in an uptrend and they are above the rising 40-week moving average line. Trend-wise things look bullish. The volume pattern is probably neutral in that it shows some strong weeks as prices rally but it does not show a pattern of increasing volume the past year. The weekly OBV line shows the same issue in that the line has basically been flat since January despite prices moving higher. This 11-month bearish divergence has not hurt the trend but it does have my attention. The weekly MACD oscillator crossed to the upside in early November for a fresh buy signal but now the two moving averages that make up this indicator are right on top of each other.
In this Point and Figure chart of GOOS, below, we can see a possible or potential downside price target of $55 being projected. A rally to $70 with improve this chart and a trade at $73 will be a double top breakout.
Bottom line strategy: An upside breakout to new highs that lacks upside follow-through is a problem for me and that is what GOOS did this month. If GOOS can quickly rally to new highs I will forgive it but the Point and Figure chart suggests a $55 price target. If GOOS declines to $55 it will weaken the charts further. I do not see a good risk/reward set-up here so I would take a rain check.