In his second "Executive Decision" segment of the evening Thursday on Mad Money, our own Jim Cramer sat down with Mark Butler, chairman, president and CEO of Ollie's Bargain Outlet Holdings (OLLI) , the closeout retailer. This week the company reported a 4.6% increase in same store sales but the stock price has nosedived.
Let's check out the charts and indicators for some direction.
In this daily bar chart of OLLI, below, we can see a weakening technical outlook before the sharp decline this month. The slope of the 50-day moving average line was negative before the decline and look at the peak in the On-Balance-Volume (OBV) line back in June, and a lower high in September, when prices made new highs.
A take profits sell signal from the Moving Average Convergence Divergence (MACD) oscillator occurs in September and in the middle of November an outright sell signal when the indicator drops below the zero line.
Prices have closed below the rising 200-day moving average line and next potential chart support is in the $65-$55 area from March and April.
In this weekly bar chart of OLLI, below, we can see that prices have swiftly declined to the 40-week moving average line. Prices could hold today but the odds are that we will see a close below the moving average line.
The weekly OBV line has been edging lower the past three months, telling me that sellers of OLLI have been more aggressive.
The weekly MACD oscillator crossed to the downside in late October for a take profits sell signal.
In this Point and Figure chart of OLLI, below, we can see the big selloff. A $69 price target is indicated but there does not appear to be much serious or significant chart support below the market.
Bottom line strategy: if you are looking for a bargain at OLLI then you should defer buying until lower levels AND a new base pattern appears.