During Tuesday's Mad Money program, Jim Cramer was bullish on AMC Entertainment (AMC) and Airbnb (ABNB) after the company's recent secondary stock offering. Beauty is also a hot category, with Ulta Beauty (ULTA) making Cramer's list.
Let's check out the charts of ULTA.
In this daily Japanese candlestick chart of ULTA, below, we can see that prices have been making higher lows from early February. We can also see lower highs from early April. Trading volume has diminished from April's peak levels and this is typical of triangle formations as the trading range narrows.
The On-Balance-Volume (OBV) line has followed price up and down. The Moving Average Convergence Divergence (MACD) oscillator is trying to move above the zero line for a buy signal.
In this weekly Japanese candlestick chart of ULTA, below, we can see ULTA's recovery from the pandemic low in March. Prices are in an uptrend above the rising 40-week moving average line. Notice the recent large lower shadow as traders rejected the lows that week. This is a strong sign that prices should go higher.
The weekly OBV line shows a positive trend but the MACD oscillator has crossed to a take profit sell signal.
In this daily Point and Figure chart of ULTA, below, we can see a potential upside price target in the $396 area.
In this weekly Point and Figure chart of ULTA, below, we used weekly close only price data. We applied a five box filter with traditional even dollar scaling. Here we see a longer-term target in the $671 area.
Bottom line strategy: ULTA is close to a breakout from this triangle pattern we have described (above). Hold longs from previous recommendations and add to longs or initiate longs at current levels. Risk to $299 for now.
