Shares of jewelry store operator Tiffany & Co. (NYSE:TIF), though still lower on the year, are also well off their year-to-date lows and are toying with a technically significant area where a boost higher could quickly reward active investors and traders.
So at least in this prognosticator’s eyes, TIF stock offers a good risk/reward prospect.
When markets get choppy (as U.S. stocks have been for most of 2015), active investors either need to shorten or lengthen their time horizons, stop-loss levels and profit target levels, or risk death by a thousand paper cuts.
In the case of TIF stock, as I’ll explain below, shortening the time frames at this current juncture is probably the best strategy.
TIF Stock Charts
Before digging into the closer-up chart, however, note that TIF stock — through the longer-term weekly chart — largely still is trending higher, and that at the year-to-date lows in April/May, Tiffany again found support at the lower end of the uptrending multiyear range.
The consolidation price action over the past couple of months has resulted in the Bollinger bands (blue lines) narrowing to levels last seen in 2013, which at the time led to a better directional move higher. With the broader consumer discretionary sector increasingly looking overbought, however, TIF stock is also at risk of faltering lower. The current technical juncture can help active investors define that risk.
The closer-up daily chart below is where all of this becomes much clearer.
Note that TIF stock so far in 2015 has had two out-sized one-day moves: a big selloff on Jan. 12, and a post-earnings spike higher on May 27. Aside from those two moves, Tiffany & Co. was largely range-bound, but those two one-day moves have left behind two still-unfilled gaps, as represented by the two blue boxes. The Jan. 12 down-gap still has room to be filled up to the $103.50 area, while the May 27 up-gap has room down toward $85.50.
While after an earnings warning or weak report it is entirely possible for TIF to fill its May 27 up-gap, for the time being, my focus remains on the stock filling at least part of the unfilled up-gap from January. Note that since the May 27 up-gap, TIF stock has built a higher base, which all the while held above its 50-day simple moving average (yellow line) and more or less below or around the 200-day SMA (red line).
Momentum oscillators are also pointing back up, and with Wednesday’s small “rally,” TIF stock has marginally pushed past the black horizontal line of resistance near $94.50 and could now work its way into the $98-$100 zone.
Any quick bearish reversal from here below $92.50, however, would call off the near-term bullish setup.
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Successful trading and investing starts with a plan. Download Serge’s essential trading plan, The Essence of Swing Trading e-book. As of this writing, he did not hold a position in any of the aforementioned securities.
