Ollie's Bargain Outlet Holdings (OLLI) reported that comparable sales rose 0.8% in Q1 to fall short of the consensus estimate +1.5%. Gross margin was 40.9% of sales vs. 40.9% a year ago. Adjusted operating income fell 70 bps to 12.4% of sales as a result of the deleveraging of Ollie's pre-opening expenses. The stock opened lower this morning so let's check the charts and indicators for some technical guidance.
In this daily bar chart of OLLI, below, we can see that prices had a quick selloff in November/December and then rallied to a new high in May. Moving into June prices pulled back to test the rising 50-day simple moving average line. The slower-to-react 200-day moving average line has had a positive slope the past 12 months. In March we can see a bullish golden cross as the 50-day average crossed above the 200-day line.
The daily On-Balance-Volume (OBV) line shows a rising pattern from late December and only some slight weakness the past two weeks - probably not enough aggressive sellers to worry investors.
The trend-following Moving Average Convergence Divergence (MACD) oscillator crossed to the downside in early May for a take profits sell signal.
In this weekly bar chart of OLLI, below, we can see some weakening of the indicators. Prices are still above the rising 40-week moving average line but the OBV line has declined the past month suggesting a shift to aggressive selling.
The MACD oscillator has been narrowing in recent weeks and could cross to a take profits sell signal in a few weeks.
In this Point and Figure chart of OLLI, below, we can see a possible downside price target in the $86 area.
Bottom line strategy: Our Point and Figure chart of OLLI (above) suggests a pullback to the $86 area is possible. Should it happen, this would mean a possible test of the rising 200-day moving average line. If OLLI does not break the this longer-term indicator it may be a buying opportunity.