ULTA due for a correction
Updated
ULTA is clearly overbought at this point in time. Now is certainly not the time to go long on this equity.
Key Points:
1. Overly bullish sentiment
2. RSI on weekly is around 85 - probably the highest in it's history.
3. RSI on daily has been hovering dangerously around 80 for quite some time.
4. There is no clear RSI divergence from price at this time.
5. Jaws of the Aroons are well open on most time frames.
Issues:
Playing with RSIs are fraught with risk. They can be very deceptive. However the statistical probability is for a corrective fall in price. How much? Impossible to say. Shorting a bull market is far more risky than going long at a pullback in bull market. If one was adopting an acceptable high risk strategy, a stop-loss would have to be pretty wide. I speculate that the correction could be back to around 220, over the next 15 weeks. This could be in two stages. The first correction may be minor.
Overall though, ULTA is 'designed' for a long. I'd be looking to go long at the next major pullback and have set up alerts to catch it e.g. if price collides with 100 or 200EMA.
Key Points:
1. Overly bullish sentiment
2. RSI on weekly is around 85 - probably the highest in it's history.
3. RSI on daily has been hovering dangerously around 80 for quite some time.
4. There is no clear RSI divergence from price at this time.
5. Jaws of the Aroons are well open on most time frames.
Issues:
Playing with RSIs are fraught with risk. They can be very deceptive. However the statistical probability is for a corrective fall in price. How much? Impossible to say. Shorting a bull market is far more risky than going long at a pullback in bull market. If one was adopting an acceptable high risk strategy, a stop-loss would have to be pretty wide. I speculate that the correction could be back to around 220, over the next 15 weeks. This could be in two stages. The first correction may be minor.
Overall though, ULTA is 'designed' for a long. I'd be looking to go long at the next major pullback and have set up alerts to catch it e.g. if price collides with 100 or 200EMA.
Note
ULTA could follow a path like this. Other paths are entirely possible. Long opportunities mean waiting on a real dent in price.
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