Ulta Salon (ULTA) blew out earnings on Friday. Here’s your trade. (December 1, 2012)
ULTA
I’m Dan Fitzpatrick at Stock and OptionMarketMentor.com on Saturday, December 1st. I want to look at Ulta Salon ( $ULTA Ulta Salon, Cosmetics & Fragrance, Inc ). This company beat their earnings on Friday and also Oppenheimer reiterated their outperform rating, but they raised their target from $112.00 to $115.00. Now, what does that mean? First let’s look at the weekly chart to see where this is. Okay, this has been consolidating for quite awhile, you look at the daily chart, it kind of doesn’t look like that, it looks pretty jiggly, but really it’s been consolidating in about a 15- point range or so. Why is that important? Well, let’s just say all the analysts have their estimates at $115.00, I’m sure they don’t, but if Oppenheimer raises its estimates and it moves the stock then I guess Oppenheimer’s the axe for this stock, in other words, what they say is going to move the stock. Okay, that puts this as the ceiling on this stock, you can’t expect this to go for another 15 percent, at least not as we sit here and look at this now. But we want to keep an eye, we want to be mindful of the fact that this actually has been consolidating for awhile and ultimately this stock is likely to push up to this $115.00 level; look, just break out of a trading range. But how do we trade this? It’s fine to just buy the stock and hope to get 15 percent. The question is, do you buy it here, right now? After this kind of move I don’t like to see stocks run from clear down to the lower part of the range all the way up without any interruption at all; that’s known as going too far too fast. And no we’re not talking about, you know, the homecoming queen on prom night, we’re talking about a stock that’s gone up too fast, too quickly, to where there’s really no real buying left to continue to push the stock higher. So instead, what I’m doing is this, I’ve got this line here, don’t expect much more from the stock, I could be wrong because I think the short interest is fairly high in the stock so we’re probably getting a bit of a short squeeze. But I want to wait for some kind of pullback, maybe it’s going to come from up here, but I want to get some kind of pullback below this resistance level and that’s when I’d want to buy this stock; maybe $3.00 or $4.00 cheaper than it is right now. But if you can get that kind of a pullback, now you’re not looking at a potential profit of 15 percent, it can get more like 18, 19, or even 20 percent. So your entry is real important on a stock like this; I just don’t want to see you buying high and selling low and then watching the stock do that. Okay, members, Weekend Update, a lot of stuff to go over, I’ve got some, I think some pretty good stocks for you so I want you to get over there and check that out. Free Chart