At the top of Tuesday's Mad Money program, Jim Cramer asked "What is the one thing consumers are willing to pay more to get?" The answer, Cramer said, is prestige, and it's on full display with a company like Ralph Lauren Corp. (RL) , which rallied sharply Tuesday. RL is winning over a whole new generation of customers thanks to a growing list of celebrity influencers. Let's check the charts and indicators to see if these gains can continue.
In the daily bar chart of RL, below, we can see a rally from late December. RL rallied above the now bottoming 50-day moving average line and just closed above the flat 200-day moving average line. The daily On-Balance-Volume (OBV) line has improved a little from late December but not huge, which says that buyers are more aggressive but not pounding the table.
The trend-following Moving Average Convergence Divergence (MACD) oscillator recently crossed the zero line for an outright go long signal. Despite these positive clues we can see that RL is back to the bottom end of what is probably a band of resistance from $125 to $145.
In this weekly bar chart of RL, below, we can see some positive technical developments taking place. RL is testing the slightly rising 40-week moving average line and a close on Friday above the line will be better. The weekly OBV line shows a good rise from December and the MACD oscillator on this longer time frame has crossed to a cover shorts buy signal.
In this Point and Figure chart of RL, below, we can see that prices have nearly reached an upside price target. RL could continue to rally but a pause is now more likely.
Bottom-line strategy: RL has rallied sharply from its late December low. With plenty of overhead chart resistance, RL is more likely to trade sideways for a while before grinding higher.