During Wednesday's "Mad Money" program, Jim Cramer noted that Urban Outfitters Inc. (URBN) was able to deliver an upside surprise. Let's check out the charts.
In this daily bar chart of URBN, below, we can see that prices have been bottoming since March. Prices traded sideways between $12 and $22 for several months, before the recent upside breakout. In addition to breaking above the June high, prices gapped above the declining 200-day moving average line. The slope of the shorter 50-day moving average line has recently turned positive. The On-Balance-Volume (OBV) line began to strengthen from late July telling me that some traders or investors who were closer to the company turned more aggressive. The Moving Average Convergence Divergence (MACD) oscillator crossed above the zero-line earlier this month for an outright-buy signal.
In this weekly bar chart of URBN, below, we can see that prices have been in a longer-term downtrend from 2018, but that downtrend has been broken. URBN is trading above the declining 40-week moving average line. The weekly OBV line has been going sideways for the past 12 months. The OBV line shows improvement since July. The MACD oscillator has turned higher and is approaching the underside of the zero line. We could see a buy signal in a few weeks.
In this Point and Figure chart of URBN, below, we can see a potential upside price target in the $42 area.
Bottom line strategy: Aggressive traders could look to go long URBN closer to $24 if available. Risk below $20 for now. Our longer-term Point and Figure price target is the $42 area.
