Little Reason to Be Long Urban Outfitters Right Now
After reporting its second-quarter numbers, Urban Outfitters might need to call in a tailor.
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Retailer Urban Outfitters URBN reported its Q2 numbers on Thursday morning and posted a GAAP EPS of $1.24 which beat estimates by $0.24 and revenue of $1.35 billion, which beat by $10 million. Unfortunately, its soft comp sales overshadowed their Q2 beat.
Let's check out the charts and indicators.
In this daily bar chart of URBN below, I can see a bear move underway. Prices moved sharply lower in early August and then formed a "bear flag." The flag is playing out today as prices are moving lower again after their drift higher for a few days. The slope of the 50-day moving average line is now negative and prices are now trading below the rising 200-day moving average line. The daily On-Balance-Volume (OBV) line has been weak since April as trading volume has been heavier on days when URBN has closed lower. The Moving Average Convergence Divergence (MACD) oscillator is in a bearish alignment below the zero line.
In this weekly Japanese candlestick chart of URBN below, I can see that prices have been testing the rising 40-week moving average line over the past two years. This week it looks very likely that URBN will close below the 40-week line. The weekly OBV line has been moving sideways the past 12 months but it could turn lower now. The MACD oscillator has been weakening the past 12 months and is pointed down towards the zero line.
In this daily Point and Figure chart of URBN below, I can see a potential downside price target in the $24 area.
In this second Point and Figure chart of URBN below, I used weekly price data. Here the software also gives us a $24 price target.
Bottom line strategy: With prices below the 200-day moving average line and breaking the April low, there is little reason to be long URBN right now. A tailor may be needed to take things in an inch or so.
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