Urban Outfitters, Inc. (NASDAQ: URBN)

Urban Outfitters, Inc., a lifestyle specialty retail company, is engaged in the retail and wholesale of general consumer products. The company operates in two segments, Retail and Wholesale. It serves its customers directly through retail stores, Websites, mobile applications, catalogs, and customer contact centers. The company operates retail stores under the Urban Outfitters, Anthropologie, Free People, Terrain, and Bhldn brands. The Urban Outfitters stores offer women’s and men’s fashion apparel, footwear, beauty, accessories, and sporting apparel and gear, as well as an eclectic mix of apartment wares and gifts to young adults aged 18 to 28; and the Anthropologie stores product assortment includes women’s casual apparel and accessories, shoes, home furnishings, and various gifts and decorative items to women aged 28 to 45.

Please take a look at the 1-year chart of URBN (Urban Outfitters, Inc.) below with my added notations:

1-year chart of URBN (Urban Outfitters, Inc.)

For the most part, URBN hasn’t taken part in the market’s rally of the last year. Instead, while trading sideways, the stock had held an important level of support at $35 (blue) for the last several months. Back in May the stock finally broke that support and fell to almost $32. The recovery over the last couple of weeks should be just a bounce before ultimately heading lower.

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The Tale of the Tape: URBN had a key level of support at $35. Now that the stock has broken support, a trader might want to enter a short trade at or near the $35 level with a stop placed above that level. A break back above $35 could negate the forecast for a move lower.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT

Follow me on Twitter: @cmtstockcoach