In his first "Executive Decision" segment of Thursday's Mad Money program, Jim Cramer spoke with Gina Drosos, CEO of Signet Jewelers (SIG) , which just posted both strong quarterly results and guidance.
Drosos said that Signet was able to grow revenues by 50% last year, which has given them the financial fitness to invest into their business, grow the jewelry category and attract new customers. Signet now has a number of competitive advantages, including their digital capabilities combined with data and analytics.
Signet is also capitalizing on weddings being at record highs this year, as everyone who postponed their ceremonies during the pandemic gears up to finally share their special day. The U.S. expects 2.5 million weddings this year, compared to the usual 2.1 million.
Other bright spots for Signet include the company's digital strategy, which involves 60% of their customers interacting online, and their extended service plans, which help customers take care of their jewelry purchases.
In our last technical review of SIG on October 13 we wrote that "The risks of staying long SIG have grown and I would advise traders to avoid the long side of SIG." The Point and Figure chart showed us a downside price target of $68.
Let's check on the charts again.
In this updated daily bar chart of SIG, below, we can see that prices topped out in November around $110 and turned lower with prices touching $60 before the recent rebound. SIG has quickly rallied above the 50-day and the 200-day moving averages. The slope of the 50-day moving average is still negative and the 200-day average line is cresting.
Trading volume has picked in March and the On-Balance-Volume (OBV) line has turned upwards to make a new high for the move up. The Moving Average Convergence Divergence (MACD) oscillator has crossed to the upside to signal a cover shorts buy signal.
In this weekly Japanese candlestick chart of SIG, below, we see a mixed picture. There is a lower shadow on the first candle of March but the pattern fails, in my opinion, to qualify as a hammer. The most recent candle is white (bullish) and has rallied to the underside of the 40-week moving average line.
The weekly OBV line shows a decline from October and the MACD oscillator has started to narrow but remains below the zero line for now.
In this daily Point and Figure chart of SIG, below, we can see that the software has responded and generated an upside price target of $130.
In this weekly Point and Figure chart of SIG, below, the chart is still showing us a bearish target of $43.
Bottom line strategy: It sounds like the fundamentals of SIG have improved but the charts and indicators do not look ready to make a bullish commitment. SIG could struggle in the $80-$100 area.