For his second "Executive Decision" segment of Mad Money Friday night, Jim Cramer spoke with Laura Alber, president and CEO of Williams-Sonoma (WSM) , the home goods retailer. The company just posted a monster dollar-a-share earnings beat, yet the stock still trades for less than 15 times earnings.
Alber said that all of the investments and initiatives they've put into place are finally coming into fruition. When she began at the company, 40% of sales came from their catalog. Today, 70% of sales stem from digital.
Alber noted that Williams-Sonoma also has a thriving commercial business as well, helping to outfit restaurants, cafes and retailers with high-quality and stylish furnishings.
Let's check out the charts.
We lasted looked at WSM on August 28 and said that "Traders should stick to our original stop protection of a close below $85 as I do not recommend accepting more risk than at the outset of a trade." I will assume that traders may have been stopped out in early September.
In this updated daily bar chart of WSM, below, we can see that the shares have resumed their uptrend with higher lows and higher highs into late November. The shares are trading above the rising 50-day moving average line as well as above the rising 200-day moving average line.
The On-Balance-Volume (OBV) line has risen from its March low and its recent high has helped to confirm the strength of WSM uptrend. The 12-day price momentum study shows lower highs from October to November even as prices have made higher highs. This is a bearish divergence and tells us that the pace of the rally the past two months has slowed.
In the weekly bar chart of WSM, below, we can see a mixed picture at best. The shares are in an uptrend and nicely above the rising 40-week moving average line.
Trading volume has been declining since March and the OBV line is largely flat the last three to four months, suggesting that buyers and sellers of WSM have been neutral and diverging from the price action. The 12-week price momentum study has been weakening from June/July and is another bearish divergence.
In this daily Point and Figure chart of WSM, below, we can see a potential upside price target in the $156 area.
Bottom-line strategy: I find it a judgment call when a stock is in an uptrend but the indicators are just not in the best alignment. That is the case with WSM right now. We are in an uptrend with a $156 price target but the indicators show us some bearish divergences. If you happen to still be long WSM, consider raising stop protection to a close below $99.