During Tuesday's Mad Money program, Jim Cramer told viewers that during most economic downturns discretionary spending plunges. That's why it was shocking to see the numbers from names like Polaris Industries (PII) which makes ATVs and snowmobiles, Thor Industries (THO) , the RV maker, and Brunswick Corp. (BC) , a leading boat and camping equipment maker. The outdoors bull market was also alive and well with Camping World Holdings (CWH) , as people choose the ultimate social distancing vacations
All four companies are in uptrends but let's check the charts of Polaris Industries because it gapped up to a new high yesterday. We looked at the charts of PII back on June 11 and wrote that, "PII has surged into the top end of a resistance zone. Prices could break out on the upside for further gains but right now I think a pullback of some degree is in order. Let's wait and see how that unfolds before making a decision."
With the rally in PII yesterday on heavy trading volume another look at PII is a good idea.
In this daily bar chart of PII, below, we can see that prices gapped higher Tuesday, making a new 52-week high. Trading volume surged. Prices are above the rising 50-day moving average line and above the rising 200-day moving average line.
The On-Balance-Volume (OBV) line has been strong and tells us that buyers of PII have been more aggressive. This matching strength helps to confirm the price gains.
The Moving Average Convergence Divergence (MACD) oscillator looks like it will turn upwards for a fresh outright buy signal.
In this weekly bar chart of PII, below, we can see that prices have broken out over the highs of 2019. This is bullish and opens the way for further gains. Prices are above the rising 40-week moving average line.
The weekly OBV line is already broken out over the highs of 2019 and 2018. The MACD oscillator crossed above the zero line last month for an outright buy signal.
In this weekly Point and Figure chart of PII, below, we can see an upside price target in the $185 area.
Bottom line strategy: PII is leading the way higher for a group of stocks (see the first paragraph above). Trade PII from the long side. Buy in the $110-$105 area and risk a close below $95 for now.
