Key Near-Term Support in Ralph Lauren (RL)

Watch for RL to break below $166

   

rl multi year 300x213 Key Near Term Support in Ralph Lauren (RL)
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Apparel designer and distributor Ralph Lauren Corp. (NYSE:RL) has left a monster stock run higher behind on the chart off the 2009 broader market lows.  The stock however reached a high in March 2012 and has thus not managed to make higher highs since, unlike the broader stock market of course.  On the back of reaching an all-time high in March 2012, the stock proceeded to  re-test its 2009 up-trend, followed by an attempt to re-test the March 2012 highs.  In February 2013, the stock fell just short of a perfect re-test, and has traded sideways to lower since.  Bears will point to a double top, bulls to the still constructive posture of the longer-term chart.

The great aspect about swing trading is that one does not need (in fact shouldn’t have) a firm opinion on the direction of the stock.  Because swing trading allows a trader to operate in multiple time-frames, one merely needs to pin-point reference levels above/below which the odds of a continuation/break of trend increases.

RL close up 300x243 Key Near Term Support in Ralph Lauren (RL)
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As it relates to Ralph Lauren Corp., the current near-term level of support I am eying is right at $166.  The level has been tested no less than seven times over the past four weeks, which thus allows for a defined line in the sand: a daily break below and the stock has further to slide.  The $166 level also coincides with the 38.20% Fibonacci retracement of the December 2012 – February 2013 rally.  Next support comes in at $162 and $158, which reflect the 50% and 61.80% Fibonacci retracement levels respectively.  The multi-year up-trend from the chart above comes in closer to $155, thus near the 61.80% level, which makes for a solid confluence support area and thus a good target for a short-side swing trade should the stock break below $166 on a daily closing basis.

Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.

 


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