For his second "Executive Decision" segment of Thursday's Mad Money program, Jim Cramer spoke with Sonia Syngal, CEO of retailer Gap Inc. (GPS) .
The company posted a 54-cents-a-share earnings beat on Thursday.
Syngal said all four of Gap's brands are back in growth mode. Old Navy's growth is accelerating as the brand enters new categories, like intimates, where it is already among the top-20 brands. Meanwhile, the new team at Banana Republic is reinventing that brand with an accessible luxury theme.
As for the company's namesake, Syngal noted that The Gap is one of the most iconic brands and they're going big with beautiful, modern designs that offer a great fit and great value.
Like Old Navy, Gap is also entering new categories with their recent partnership with Walmart (WMT) , which will write a new chapter for Gap Home.
Let's check out the charts of GPS.
We looked at GPS on April 20, noting that "The charts of these three retailers - [L Brands] (LB) , [American Eagle Outfitters] (AEO) and GPS - are positive but at or close to Point and Figure price targets. If weakness from the broad market spills over into the retail sector we could see a period of sideways price action for LB, AEO and GPS before renewed gains."
In the updated daily bar chart of GPS, below, we can see that the shares have largely traded sideways since late April. The On-Balance-Volume (OBV) line has been steady/flat the past two months. The slopes of the 50-day moving average and the 200-day average are positive. GPS tested the 50-day line last month.
The Moving Average Convergence Divergence (MACD) oscillator has corrected lower since late March but has narrowed in recent days and could soon give us a new buy signal.
In the weekly Japanese candlestick chart of GPS, below, we can see three upper shadows above $36 telling us that traders have been rejecting those prices.
The weekly OBV line is rising with the price action and tells us that buyers of GPS have been more aggressive. The MACD oscillator has narrowed in recent weeks and could cross to the downside for a take profits, sell signal.
In this daily Point and Figure chart of GPS, below, we can see that the software is suggesting that a pullback or correction to $27 is possible.
In this weekly Point and Figure chart of GPS, below, we used close-only prices and a five-box reversal filter. Here the software is projecting a price target of $152. This target is pretty ambitious but a close at $37 will be an important upside breakout.
Bottom-line strategy: A weekly close at $37 or higher will be bullish for GPS. Above $37 there is some older chart resistance in the $40-$47 area. This may or may not stall price gains in the months ahead but overcoming this area will be bullish and should open the way to further gains. Traders could go long on a close above $37. Risk to $31.
