Urban Outfitters, Inc. (NASDAQ:URBN) – Major Breakout Above $46.50
Denver, CO, 08/21/2013 (Avauncer.com) – Urban Outfitters, Inc. (NASDAQ:URBN) (Closed: $43.19, Up: 8.19%) opened with a huge gap up on the news of it posting an excellent quarterly result that beat the market expectation comprehensively. It opened about 10% higher and sustained the higher levels though it lost a couple of percentages due to some profit booking. The volume soared too as it touched the 8 million mark against the average of less than 2 million.
The long term chart of this stock is a beauty. It rose like a phoenix in the aftermath of the IT bubble burst to reach a high of $33.77 in 2005 from its 2003 bottom of $2 only. After an exact 61.8% correction, the Golden Ratio, in 2006 it rose again to post a new high at $38.40 in 2008. The next correction and the recovery after that - both were very violent and traced a V-shaped recovery. The last major bottom took place in $21.47 in 2011 and the major rally from that point is in motion till now. This price action in the period of 2005 to 2013 has created a pattern called a Neutral Triangle in the Neowave parlance, the modified Elliot Wave theory of Glenn Neely. In the classical way, it is an Inverted head & Shoulders pattern with perfectly symmetrical shoulders. The breakout point is $46.35.
If the price can break and sustain above $46.35 in the coming days, it would be the signal for the completion of the Triangle and hence, a major multi-month move towards $87 would unfold. Immediate target would be $53 levels. On the other hand, a failure to breach this level convincingly would be a signal for a Double Corrective developing and a down move towards $28 - $30.
Investors could get in above $46.30. The weakness would come only below $39.50 when a move towards $34 would be the probable target.