Yes, it really is time to sell Ulta Salon (ULTA). Sorry. But it’s time. (August 26, 2016)
ULTA
In this video I’m going to talk about Ulta ( NASDAQ:ULTA ). I chatted about this a couple of times last week, but here’s the deal: This is what this looked like on Friday. They reported earnings Thursday, and frankly the earnings seemed pretty good. Above average, above estimates, but the stock trended lower, like in a big way. So what does this mean? What it means is, that all of this stuff is baked into the price of the stock. It doesn’t mean that the company has had a bad quarter. It doesn’t mean that the stock may not ultimately go higher. But look, what goes up must go down. This had been trading sideways for quite a while. And, “Oh, it’s just kind of starting it’s move, right?” Well not really. Long base here, long high base, and now we’ve gone up, at one point, over 100 percent.
It’s a cosmetic company, it’s not a biotech company. It’s a STORE, you’ve got one near you, go in there and buy your products. The point is, this is a big distribution day and you don’t really need to know any more than that. It’s a big distribution day, which MEANS that this UPTREND, this uptrend, which had been your friend, is now broken. The stock has had a big nasty sell-off to the 50-day moving average, and it might hold there. But here’s what you’ve got to know: Everybody who’s now bought in this range, which is all these fine folks here, they’re all losers. A lot of them, if people start to buy the stock, if there starts to be some demand to buy the stock, you’re going to see a lot of selling pressure here; which means AT BEST the stock is going to trade sideways for a while.
They had great earnings. What’s the catalyst to move the stock higher if great earnings wouldn’t do that. And that’s the point. You’re wasting precious time by keeping your precious money in this stock. Also, you are risking that the stock could have a deeper correction. I’m not saying that it will, I think that it’s kind of likely that it will trade around in this box. But I don’t really care to own stocks that are trading around in a box, particularly when they do have a risk of falling BELOW what had been support for quite a while. I would rather buy stocks that are just coming OUT of a box. THIS is not that.
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