Tiffany & Co. (TIF): This Luxury Stock Just Regained Its Luster

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Tiffany & Co. (NYSE:TIF) shares rallied hard Wednesday on the back of announcing its latest earnings results, and suddenly, TIF stock looks as good as new.

beat the bell stock investing adviceTiffany & Co. has been trading in an unusually tight, defined range for most of 2015 — one that clearly resolved to the upside after Wednesday’s high-volume rally. Active investors and traders could now look to play the stock for further upside if follow-through buying ensues and Wednesday’s intraday highs are overtaken.

In its first quarter, Tiffany earnings 81 cents per share, which was 3 cents better than the Street’s estimates. Revenues fell 5% to $962.4 million, but that too beat expectations, as Wall Street anticipated a 10% decline. A couple other notes: Gross margins widened by 90 basis points, and European sales jumped 17% … but Japanese revenues declined by almost 25%.

TIF Stock Charts

Looking at TIF stock from a long-term perspective, we see that for the most part the rally off the 2009 lows has taken place in a well-defined, uptrending channel. An overshooting move in the summer of 2011 then naturally led to a full-bore correction back down to the lower end of the channel where the next rally found better odds.

By late 2014/early 2015, TIF stock had again moved to the very upper end of this longer-term channel, and the ensuing drop in January through April again pushed the stock to the lower end of this range. Wednesday’s rally then saved the day (for now) and pushed Tiffany & Co. off the support line and back toward the middle of the multiyear range.

One can look at this as a simple game of probabilities — one in which the odds of a successful long-side trade in TIF stock naturally should be higher near the bottom of this big-picture trading channel than they would be at the top of the channel. This is a simple concept, but one that too often is ignored as traders try to chase stocks near their highs.

tif stock charts weekly
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Over on the daily chart, we see that after a big drop in January, TIF stock settled into a fairly narrow and well-defined trading range near the bottom of the big-picture channel. On Wednesday the stock then blasted higher to the tune of 10.5% on a big surge in volume. A classic follow-through buying trade may thus be setting up.

tiffany tif stock charts
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While aggressive traders could try to buy TIF stock anywhere within Wednesday’s trading range, more conservative traders might first want to see if Tiffany can overcome Wednesday’s intraday highs in coming days. A next logical upside target would then be the $100 mark, while any major bearish reversal would call the near-term trade setup into question.

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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/05/tiffany-co-tif-stock-luster/.

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