Monday, August 3, 2015

Ralph Lauren breaking down from a 3-year topping pattern

Let's look at the weekly chart of Ralph Lauren:

From about $30 a share at the financial crisis lows of 2009 to almost $200 a share in mid-2013, Ralph Lauren has mirrored the current historic bull market. Now, however, Ralph Lauren may have topped out and started a significant down trend. The next chart is a daily chart that focuses on the previous 18 months:

We see a 5-month continuation rectangle that could propel the breakdown.

Warning: Ralph Lauren is due to release is next earnings report on August 5, 2015. The market's response to an earnings release is unpredictable. I exit from all or most of my position before an earnings release no matter how promising the pattern. The only exception is if I am sitting on a significant profit. If I were not in this trade yet, I would wait for the dust to settle from the earnings release and then evaluate whether there is an attractive entry opportunity. If no entry spot presents itself, I must remember to let this trade go - because there will always be other opportunities.

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