Burlington Stores, Inc. engages in the retail of off-price apparel and home products. It offers women’s ready-to-wear apparel, accessories, footwear, menswear, youth apparel, baby, coats, beauty, toys, and gifts.
Take a look at the 6-month chart of Burlington (BURL) below with the added notations:
Chart of BURL provided by TradingView
Over the past several weeks, BURL has created a trendline of support (green), which is also the “neckline” for the stock’s bearish head and shoulders (H&S) topping pattern. Above the neckline you can see the H&S pattern (red) has been completed.
Confirmation of the H&S would occur if BURL were to break the support, and that is exactly what the stock did yesterday.
The Tale of the Tape: BURL has confirmed a head & shoulders pattern. A short trade could be made on a rally up to the neckline, with a protective stop set above that level.
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
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