  ULTA-- Reporting this week, GS downgrades... another firm says buy prior to earnings
Cramer in his CNBC mad dash prior to the open this morning starts off talking about 3 stocks, the first one is ULTA-- Ulta Salon, Cosmetics & Fragrance, Inc. (ULTA) Cramer describes it as a barometer of high growth, high multiple stocks and thus it may have predictive value for those types of companies that have been one of the cornerstones of this ebullient bull market period of the past couple of years and especially since last Summer and Particularly kicking into Turbo Warp Overdrive in November when the Bank of Japan and the Japanese Government went beyond all in at the Last Chance Saloon of 190 proof Quantitative Easing which they cubed (grade school math operation.....) with direct purchases of equities, ETF's and other assets.... even the wallpaper on the walls as Art Cashin so Aptly put it.... -vbg-
Ok so let's go to the chart on ULTA......... It is bad....... (still working on the formating when inserting pictures and when using the quotation boxes),,,,, and I am more from the John Lennon school of ...ok we have a take...I don't bloody care if it's a little rough, I'm going to go have a smoke and chase down those bits that I left up town......... (kids, do not try this at home, for entertainment purposes....no....instructional.......my lawyer is demanding boilerplate verbiage.... always consult your Financial Advisor, CPA and Tax attorney and only do what they all sign off on in triplicate....) so we can not always be so nimble in trading and investing....
which brings me to the weekly chart of ULTA........ the weekly chart is way back up at the top... It is a broken stock...... One of my very best indicators which I normally hide.... or make people consult with me and pay me money to explain this stuff for them is the Moving Average Cross over system on the RSI...
as you Know Welles Wilder developed the 14 day Relative Strength Index in his late 1970's book.... in Calculus terms.. the RSI is a derivative since it is derived first from the daily price close and then the 14 day average of the last 14 trading days and then it is calculated to reflect a number between zero and 100.
back in the stone age before we had PC's this stuff took a lot of work..... people that I have worked with used slide rules.....once upon a time....anyway.... now life is easy in theory....
we can now with a requisite amount of programming knowledge and a really STRONG grasp of what it is we are looking for in this sea of info.. we can go back to the chalk board and trying to figure out how we were ever going to use a second or 3rd derivative.... I personally thought it was complete nonsense... I was not working for NASA and building ICBM's....
but it turns out that when we put some different moving averages and exponetial moving averages and calculate them on the 14 day RSI some interesting things emerge when we have the really good systems programmers run through all the data.
We have found that the 45 day EMA is usefully and when the 9 period EMA goes beneath the 45 period it got us short ULTA at 98.46.... kept us short at the all time high of 103.25 last August and still has us short...on the weekly chart.... the daily and 6 hourly time periods ..... help to fine tune entry points.
BOTTOM LINE POSITION TRADERS ARE EITHER SQUARE OR SHORT THIS STOCK.
JJP
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