Ralph Lauren Seems to Be Doing Something Right, Continue to Hold Longs

In Tuesday night's Mad Moneyprogram, Jim Cramer noted that even apparel maker Ralph Lauren Corp. (RL) was able to send the short sellers heading for the hills as it rallied sharply. Let's try on a few charts to see if this strength can continue.   

In this daily bar chart of RL, below, we can see a price low back in August. RL rallied with a couple upside gaps and a couple pullbacks into early February.

The On-Balance-Volume (OBV) line moved higher from August to tell us that buyers have acted more aggressively and the rise in the indicator helps to confirm the price gains.

The Moving Average Convergence Divergence (MACD) oscillator moved above the zero line for a buy signal back in late October and it looks like this indicator is turning higher again for a new buy signal.  

In this weekly bar chart of RL, below, we can see the pattern of prices the past three years. Prices have been above the 40-week moving average for about two months and we should soon see the slope of the line turn positive.

Trading volume looks like it has diminished during the rally last year and the longer-term trend of the OBV line is still negative/neutral. The MACD oscillator is bullish.  

In this Point and Figure chart of RL, below, we can see the uptrend without any price gaps. New highs for the move up have been made and a $158 price target if being projected. 

Bottom line strategy: We know that the apparel business can be hit or miss but right now it looks like RL can trade higher. Hold longs recommended last year and raise stop protection to $115. 

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