For his "Executive Decision" segment of Mad Money Tuesday night, Jim Cramer spoke with Timothy Boyle, president and CEO of Columbia Sportswear Co. (COLM) , the outdoor apparel maker that's had to deal with lingering warm weather, a lingering trade war and now the coronavirus. The shares are down 10% for the year.
Cramer said Columbia is a stock that you buy when it's warm and sell when it gets cold and shares soar.
Let's check out the charts and maybe the weather forecast.
In the daily bar chart of COLM, below, we can see that prices have been weak not just so far this year but for the last 12 months. The slope of the 200-day moving average line is negative or bearish and the shorter 50-day moving average line is cresting. Prices gapped higher in December but could not overcome the highs of September and October and the downtrend eventually resumed.
The daily On-Balance-Volume (OBV) line is pointed down with prices but it is not at its lows like the stock price. This is a bullish divergence but it may not mean much at this juncture. The trend-following Moving Average Convergence Divergence (MACD) oscillator is below the zero line in a sell configuration.
In the weekly bar chart of COLM, below, we can see a rally followed by a large topping-like pattern going back to early 2018. Prices are trading below the declining 40-week moving average line.
The weekly OBV line has been in a decline since September 2018 and that tells us there has been a significant amount of liquidation (selling). The MACD oscillator is below the zero line and just crossed to the downside for another sell signal.
In this daily Point and Figure chart of COLM, below, the software is projecting a potential downside price target in the $81-$80 area. A rally to $96.45 is needed to make the chart look bullish.
Bottom-line strategy: 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.