Ulta Beauty Inc. ULTA is down sharply this Friday following its third-quarter earnings report last night. Are the charts a make-up disaster? Let's check.
In this daily bar chart of ULTA, below, we can see that share prices started to decline in the middle of November. Did someone notice that store traffic was down? I don't know but in early December prices fell below the cresting 50-day moving average line and they gapped lower today. The still rising 200-day moving average line intersected just above $250 now. The daily On-Balance-Volume (OBV) line shows a peak in November and some recent weakness. The Moving Average Convergence Divergence (MACD) oscillator shows a lower high in November when prices make higher highs - a bearish divergence and the indicator has also crossed to another take profits sell signal two weeks ago.
In this weekly bar chart of ULTA, below, we can see some weakening indicators. Yes prices are above the rising 40-week moving average line but the weekly OBV has dipped and the weekly MACD oscillator has narrowed towards a possible bearish crossover.
In this Point and Figure chart of ULTA, below, we can see that prices are close to reaching a downside price target but a trade at $260.88 will be a new low for the move down and could prompt or precipitate further declines, in my opinion.
Bottom line strategy: ULTA does not show a big distribution top formation but lately traders and investors have not needed that to decide to get bearish and sell aggressively. There is a heightened risk that ULTA could break its 200-day or 40-week moving average line in the weeks ahead. Get defensive.