Looking for a thing of beauty? Check out Ulta Beauty ($ULTA) (September 30, 2019)
ULTA
I want to look at Ulta Beauty ( NASDAQ: ULTA ) today. The reason is that this is starting to be a thing of beauty. We actually have an option trade going on right now; we are down a bit on this because the stock broke out above 245.00 but I will be rolling that out and up and taking more of a bullish position on this. The way I see this stock trading, it’s very close to breaking out above this late August disaster here on August 30, where the company reported earnings and they weren’t that great. It has been languishing down here for quite a while and I think fortune is just about to shine on new bulls.
Now, if you bought this and have been hanging onto it that’s fine, you’re starting to get paid off now. But I really think for you bottom feeders, the ones who really like these types of trades, what you want to do is look back here at the high of 254.50. I would say this, set an alert at 255.00, I’ll set one on my personal software here for a week, I don’t even think it’s going to take that long. If the stock starts breaking out above 255.00 then you are going to start seeing it filling this gap. I have no idea, nobody else does, how high this will run but this was a heck of a gap from down here from almost 25 percent. So even if the stock fills half of that, if the stock fills a quarter of that gap that’s going to be a pretty good run.
So wait to buy this stock above 255.00, 250.00 is fine too, if you wait to buy the stock above 255.00 then you know it’s into the gap. It is kind of like it has broken through, now it’s free running into the gap. And there has been so much time that has passed that you think about all the regret, all the pain from bulls that bought up here, gradually a lot of those shares have been sold. A lot of this overhead supply has dissipated throughout the last few weeks because gradually people are selling. They are going like, “Crap, I bought it at 330.00 I was hoping for a big run higher. It’s not. I am sitting here waiting, watching it at 230.00, it’s been sitting around there for weeks. I have got to get rid of this stock. I am tired of feeling bad.” When that kind of supply gets soaked up then how much overhead supply is there left? Not that much.
Remember, the nearer in time a price level is the more relevant it is to the current price level. So it’s the magic of the x-axis. What you want to see is, you want to see all of this price action way back there. And then as the stock runs higher, it stretches further and further along the x-axis to where any overhead supply can’t really even be seen because it is kind of out of the picture. I am not talking about just doing it this way, I am saying, just take this stuff back 2, 3, 4 months and then you have to assume that that same hard level of resistance that was there before is not there now. That’s really what I am looking for here. Once this stock breaks through 255.00 I think you can get a really nice trade out of this to the long side.
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