During Monday's Mad Money program last night, Jim Cramer was bullish on The Gap (GPS) , which is thriving from its Athleta brand. Let's check in on the charts and indicators.
In this daily bar chart of GPS, below, we can see that prices have more than tripled from their early April low. Prices are above the rising 50-day moving average line as well as above the bottoming 200-day moving average line.
The On-Balance-Volume (OBV) line has been stalled the past two months even though prices have made new highs for the move up. This is a bearish divergence and suggests that buyers are not really propelling the upside.
The 12-day price momentum study in the bottom panel shows equal highs from September to October and this too is a bearish divergence when compared to prices making higher highs.
In this weekly bar chart of GPS, below, we still see a bullish picture except that overhead resistance starting at $24 could be a significant hurdle.
The 40-week moving average line has started to improve and the weekly OBV line is still pointed up.
The weekly MACD oscillator is still in a bullish alignment.
In this daily Point and Figure chart of GPS, below, we can see that prices are still in an uptrend but have exceeded the $17 price target. A decline to $18 may start to weaken this chart.
Bottom line strategy: If you happen to be long GPS from lower levels this may be a good time and location to book some profits as the bearish divergences on the daily chart suggest we could see a pullback at some point.
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