In his first "Executive Decision" segment of Mad Money Thursday night, Jim Cramer spoke with Gina Drosos, CEO of Signet Jewelers (SIG) , the jewelry store chain.
Drosos said that Signet has cracked the online jewelry sales model with two initiatives. The first are better visualizations. The second are expert consultations, just like you'd get in stores. Signet now has 700 virtual sales personnel to help customers with their online purchases.
Drosos noted the company has been paying down debt and using data and analytics to reduce their inventory by making sure only the right items are in all of the right places.
When asked about their retail footprint, Drosos said they have been migrating from mall-based locations to off-mall locations which have a higher sales profile.
In this daily Japanese candlestick chart of SIG, below, we can see the March low that SIG sunk to and the eight-fold recovery rally since March. Prices are trading above the rising 50-day moving average line. The slower-to-react 200-day line has a positive slope also but intersects around $17-$18 which means that prices are more than twice the 200-day line -- a sign of being extended or overbought.
The On-Balance-Volume (OBV) line has been increasing from late March and tells us that buyers of SIG have been more aggressive. Prices have rallied sharply since the middle of December and the OBV has lagged. This could become an "issue". The Moving Average Convergence Divergence (MACD) is bullish.
In this weekly Japanese candlestick chart of SIG, below, we can see a base pattern extending back to late 2018. Prices have broken above the highs of the base from early 2020. The height of the base when projected upwards measures to the $55 area.
The slope of the 40-week moving average line is positive and the weekly OBV line is much stronger looking than the daily OBV line. The MACD oscillator is bullish.
In this daily Point and Figure chart of SIG, below, we can see that prices are well above their price target of $33.
In this weekly Point and Figure chart of SIG, below, we can see a price target of $46.
Bottom line strategy: It sounds like SIG has done a good job in turning around the company during the death of the malls and rise of the pandemic, but prices are extended (overbought) above the longer moving averages. Bearish divergences are not showing but there is a risk of a pullback to the top of the base pattern or down to the $30 area. Patient investors should wait for this potential correction before buying.
