Ulta Beauty (ULTA) Breaks Out

Ulta Beauty, Inc. (ULTA) engages in the retail of beauty products. Its products include makeup, skin care, tools and brushes, fragrance, and bath and body. The company was founded on January 9, 1990 and is headquartered in Bolingbrook, IL…

Take a look at the 1-year chart of Ulta Beauty (ULTA) below with added notations:

During the past 3-4 months, ULTA had formed an important resistance at around $350 (red), but now that the stock has broken above that level, while also hitting a new 52-week high, overall higher prices should be coming. If ULTA pulls back, the $350 level should provide support.

ULTA broke its 52-week resistance of $350. The possible long position on the stock would be on a pullback down to that level with a stop placed under it. A failure to hold $350 could negate the expectations for a higher move.

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

@cmtstockcoach