In the first Executive Decision segment of his "Mad Money" program Tuesday, Jim Cramer spoke with Tim Boyle, chairman and CEO of Columbia Sportswear (COLM) , the outdoor apparel maker which recently reported second-quarter revenues that was down 40% year over year.
Boyle said being in the great outdoors is one of the few activities people still can do with their families while social distancing. That's why Columbia's products are still in demand.
Regarding the company's e-commerce efforts, Boyle said Columbia not only has its own website for direct-to-consumer sales but also works with many retail partners to ensure that people can buy its products online from the comfort of their homes.
Let's move to the couch and take a look at the charts of COLM. We last looked at the charts on Feb. 12 when the pandemic was just starting and wrote at that time, "I do not know what the weather will bring nor do I have any idea how things will play out with the coronavirus. However, I can see that COLM has been in a downtrend with no signs of a bottom yet. With our Point and Figure chart suggesting that a decline to $80 is possible I would avoid the long side of COLM for now."
In this daily bar chart of COLM, below, we can see that prices not only declined to $80 but continued lower. COLM did not find buying interest until the $55-$50 area. Prices have recovered from the middle of March, but we can see a good correction or retest of the March nadir in May. COLM rallied again and stalled at the underside of the declining 200-day moving average line. We can see additional rally failures in July and August. The slope of the 50-day moving average line has turned flat recently.
The On-Balance-Volume (OBV) line did not bottom until May, telling us that more aggressive selling lasted longer for COLM than many other stocks. The OBV line has only improved marginally into August. The trend-following Moving Average Convergence Divergence (MACD) oscillator has been hugging the zero line recently, telling us that there is little in the way of trend strength.
In this weekly bar chart of COLM, below, we can see that prices rolled over in a large topping pattern in 2018 and 2019. Prices are trading below the declining 40-week moving average line. The weekly OBV line shows a long decline from the middle of 2018 and only some modest bottoming/stability in recent months. The MACD oscillator gave a cover shorts buy signal in May but is still below the zero line and a buy signal.
In this daily Point and Figure chart of COLM, below, we can see a potential upside price target of $95 but the chart needs a trade at $83.08 to refresh the uptrend.
Bottom line strategy: COLM may be doing the right things on the fundamental side, but the charts are not convincing and the several rally failures at the 200-day moving average line are not a vote of confidence. Aggressive traders who want to probe the long side of COLM should do it only on strength to $83.08 accompanied by an increase in volume. Otherwise I would wait for better technical signals.
