TheStreet's Quant Ratings service has downgraded retail giant Burlington Stores Inc. (BURL) - Get Report to "C+ Hold" from a previous "B- Buy" based on quantitative analysis, and the stock's charts don't look all that stylish, either.
In this daily bar chart, we can see that BURL recently closed below both a flattening 200-day moving average (the blue libe below) and its now-declining 50-day moving average (the gold line):
Burlington has also broken below its April and May lows, which turned the trend from up to down even though the stock does show some support in the $85-$80 area it hit in January and February.
Still, Burlington's daily On-Balance-Volume line (OBV) turned lower in May -- indicating that for almost two months, the stock's sellers have been more aggressive. The Moving Average Convergence Divergence oscillator (MACD) likewise recently moved below the zero line for an outright sell signal.
BURL's weekly chart shows even more bearish signals:
While BURL has made a pretty impressive advance over the the past three years, the stock recently closed below its rising 40-week moving average (the gold line in the chart at the top above). The weekly OBV line has also been neutral or flat for nine weeks -- something that technicians would view as a serious bearish divergence from the stock's price action, which has been positive. Adding to the negative bias, Burlington's MACD oscillator has crossed to another "liquidate longs" sell signal even though it's above the zero line on this time frame.
In this Point and Figure chart, we can see how BURL broke lower from the trade at $90, which was a new low for the stock's latest move downward:
This chart indicates that the next low to break is at $80 a share. A move below that could open the way for a much deeper decline, which this chart projects as possibly goining as low as $59 a share.
The Bottom Line
Add it all up and while Burlington shares could still rebound from their recent slide, the $90-$95 area is probably going to act as resistance. (The stock is trading at $89.97 as I write this.) Declines also appear possible -- and perhaps even likely -- if the stock breaks below $80 a share.
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(This column originally appeared at 1:28 p.m. ET on Monday, June 26, on Real Money, our premium site for active traders. Click here to get great columns like this from Bruce Kamich, Jim Cramer and other writers even earlier in the trading day.)
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