Uptrending ULTA Breaks Strongly Higher May 27

May 27, 2016: 11:18 AM CST

“Strong Stocks Tend to get Stronger” and Ulta Salon (ULTA) – a stock you may never have traded – is a perfect example of our investing concept.

Stronger than expected earnings yesterday became a catalyst to boost share prices strongly higher on a large upside gap this morning.

Here’s our weekly chart with the “Strong Getting Stronger” concept in full display:

Price paused in a range through 2013 and 2014 but broke higher into a stable, persistent uptrend through 2015.

Another small consolidation into 2016 gave way to an extremely powerful, sharp uptrend into today.

Note the three phases of upward price action (note the angles of the arrows) as the “strong stock got stronger.”

With this larger picture trend in mind, let’s focus on the short-term trend and upside gap today:

What resembled a possible Distribution Top into 2016 (with “Bear Trap” Breakdown in February) gave way to an upside gap (on high volume and momentum) in March, another upside gap in April, and now ANOTHER upside gap in May.

Lesson 1 is that we NEVER short-sell or fight a strongly uptrending stock.

Lesson 2 is that we should look to buy pullbacks (retracements) as a conservative tactic or even breakouts as a more aggressive trading tactic.

Note that each green highlight – a breakout from a short-term range – represents a gap and continuity of the upside action (allowing aggressive swing and day traders a quick profit… even though it feels risky to buy breakouts).

Whatever Fundamental reason is pushing this stock higher, it’s persistent as seen on the chart and the continued profits of the buyers (bulls).

In short-term trading or investment strategies, find strong stocks and look for continuity of uptrends in motion.

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Corey Rosenbloom, CMT

Afraid to Trade.com

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1 Comment

One Response to “Uptrending ULTA Breaks Strongly Higher May 27”

  1. Majnu Says:

    The movement is seriously bullish so perhaps might not be too bad to enter into long, but got to be careful that we don’t enter at reversal or else it can really put us into difficult position. I work with OctaFX broker and that’s where I get support through their rebate program since I am able to earn 15 dollars profits per lot size trade and that’s even with losing trades too, so all ever so handy for me and helps me up with performing nicely.