At the top of Jim Cramer's Mad Money program Thursday night, he mentioned retail and pointed out the strength in Ralph Lauren Corp. (RL) which shot up 14.6% on strong earnings, taking much of the retail sector along for the ride.
Let's check in on RL to see if this price jump is a one time event or the start of a bigger advance.
In this daily bar chart of RL, below, we can see that prices were improving before Thursday's gap higher. RL made a low in August and a higher low in October. On Wednesday RL closed just below its September high and yesterday it gapped above that high to create or start an uptrend (higher high and higher low).
RL also gapped above the bottoming 200-day moving average line and it was above the rising 50-day line from the middle of October.
The On-Balance-Volume (OBV) line bottomed with price in August and it has moved higher signaling to us that buyers of RL have been more aggressive for several weeks now.
The Moving Average Convergence Divergence (MACD) oscillator crossed above the zero line in October for an outright go long signal. All before Thursday's gap to the upside. Thursday's rally also pushed RL through most of the overhead resistance from June/July.
In this weekly bar chart of RL, below, we can see that prices are above the declining 40-week moving average line. A steady close today (Friday) will give us a weekly close above the line.
The weekly OBV line has been strong since the middle of August and tells us that buyers on this time frame have been more aggressive. The MACD oscillator crossed to the upside in October generating a cover shorts buy signal.
In this Point and Figure chart of RL, below, we used weekly close only price data to construct this chart. The software has generated a potential price target of $162 or a breakout over the peak of 2018.
Bottom line strategy: Bernard Baruch would be impressed if he were alive today. First by the strength and longer-term price target for RL, and secondly because Ralph Lauren dropped out of Baruch College and still became a big success. Traders could go long RL or add to longs on any one or two day dip. Risk below $100 for now.
