In his first Executive Decision segment of last Friday "Mad Money" program, host Jim Cramer spoke with Gary Friedman, founder, chairman and CEO of high-end home furnishings retailer RH (RH) .
Cramer asked how RH has been able to defy the skeptics for so many years. Friedman said people are always taught to just look at the stars and not to reach for them, but that's what RH always has done. He said RH doesn't build furniture stores, it builds inspiring spaces.
RH has created a whole new market, Friedman said. That's why its Chicago location has seen more than 100 wedding proposals and why its new Paris location will serve champagne and caviar overlooking the Eiffel Tower.
We reviewed the charts and indicators of RH on Sept. 8 and wrote, "RH may see higher highs in 2022, but in the short run looks a little soft and traders may want to consider reducing their long exposure." Let's check and see if anything has changed.
In this updated daily bar chart of RH, below, we can see that prices have struggled above $700 and finished the week on the downside on heavy volume. Prices could weaken further but that might be a temporary phenomenon. The 50-day moving average line could be tested this week but the slope of the 200-day moving average line remains very positive. The trading volume increased recently as prices sank, but the overall trend of the On-Balance-Volume (OBV) line has been positive and bullish. The Moving Average Convergence Divergence (MACD) oscillator is hovering around the zero line and needs to be watched closer for short-term clues.
In this weekly Japanese candlestick chart of RH, below, we see a mixed picture. We can see several upper shadows above $700 but also some lower shadows. There seems to be a battle of sorts between traders rejecting the highs and also the lows. Eventually prices will make up their mind which way to go. The OBV line is steady to higher while the MACD oscillator is pointed lower.
In this daily Point and Figure chart of RH, below, we can see a potential upside price target of $883. Impressive.
In this weekly Point and Figure chart of RH, below, we can see a possible price objective in the $570 area. A trade at $749.04 will improve the picture.
Bottom line strategy: The long-term trend of RH is up and we want to keep that in mind. I suspect that RH will move higher after frustrating the longs the past four months or so. Go long on a breakout over $750 and risk below $640.