Watch These Ulta Price Levels After News of Buffett Stake Sends Stock Soaring
Shares Jumped 14% in Extended Trading
Key Takeaways
Ulta Beauty (
ULTA
) shares surged nearly 14% in extended trading on Wednesday after
a regulatory filing revealed
that Warren Buffett’s Berkshire Hathaway (
BRK.A
,
BRK.B
) had taken a stake in the cosmetics retailer during the second quarter.
According to a
13-F filing
made available after the close of trading Wednesday, the
Omaha-based conglomerate
purchased 690,106 shares of Ulta Beauty, with the size of the holding valued around $266.3 million as of June 30.
Berkshire’s investment comes as welcome news for shareholders in the specialty chain, whose share price, as of the close of trading Wednesday, has fallen 42% since the stock recorded its
record high
in March. In May, the company lowered its full-year fiscal 2024 outlook amid moderating demand.
Ulta beauty shares rose 14% to $375.50 in after-hours trading.
Below, we take a closer look at the
technicals
on Ulta Beauty’s chart and point out key price levels to watch out for.
Falling Wedge in Focus
Since recording their record high in mid-March, Ulta Beauty shares have traded within a
falling wedge
, a chart formation that, while sloping downwards, indicates a bullish trend reversal.
Prior to Wednesday’s post-market pop, buyers had defended the pattern’s lower trendline, enough to lift the
relative strength index (RSI)
indicator out of oversold territory.
Levels to Monitor Amid Berkshire-Inspired Jump
Amid Thursday’s expected Berkshire-inspired jump in Ulta Beauty shares, investors should monitor four key price levels.
The first sits around $373, an area on the chart where the price runs into a
confluence
of
resistance
from the October and May
swing lows
, the falling wedge’s top trendline and the downward sloping 50-day moving average (MA).
A close above this level could see the shares climb to $406, where they may encounter selling pressure from a
horizontal line
connecting the June 2023 swing low with multiple
peaks and troughs
from August last year to July this year.
Further buying may drive a rally to the $440 region, currently sitting just below the closely watched 200-day MA. This area would likely find resistance near a multi-month trendline linking the May 26, 2023
gap
high, the August 2023 swing low, and the April 3, 2024 gap low.
Finally, a longer-term uptrend could test higher resistance near $487, where sellers may decide to
lock in profits
around the July 2023
swing high
, which also roughly aligns with a period of
consolidation
from December to January that followed a stock gap.
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As of the date this article was written, the author does not own any of the above securities.
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