Selling Brings Oversold Conditions to Urban Outfitters

The last time shares of Urban Outfitters (NASDAQ: URBN) were trading in technically oversold territory was during a slide early in March when the stock fell for three out of four trading days. Shares of URBN rallied by nearly 5% over the next eight trading days as the stock climbed to test 6-month highs.

Heading into trading on Wednesday, URBN is not as oversold as it was a few days ago. The stock plunged by more than 5% in Tuesday’s session as traders sold the forementioned rally – a rally that had taken the stock into short-term overbought territory for two days in a row before Tuesday’s reversal. As a result of the selling, the stock is trading at new, two-week lows and a positive edge in the short-term of more than one and a quarter percent. Any significant selling over the next few days almost certainly will be enough to pull the stock down into technically oversold territory, where the stock’s short-term edges would likely be even greater.

The pullback in Urban Outfitters has resulted in a major ratings upgrade, as well. Entering Tuesday’s trading with a “consider avoiding” 3 out of 10 rating, the stock is set to open Wednesday morning the recipient of a three-point upgrade and neutral ratings of 6 out of 10. And while not yet in our highest “consider buying” category of stocks earning ratings of 8, 9, or 10 out of 10, the speed of the upgrade in the stock suggests that continued weakness could go a long way toward boosting URBN’s increasingly attractive short-term rating.

Other specialty apparel store stocks that traders may want to keep an eye on include Cache Inc. (NASDAQ: CACH) which has begun to sell-off in the wake of rallying to new, 52-week highs at the beginning of the week, as well as Body Central (NASDAQ: BODY). Shares of BODY pulled back into technically oversold territory on Friday as part of a two-day pullback. The stock has closed lower now for three out of the past four trading days, and will take a positive edge of three-quarters of a percent into trading on Wednesday.

Like Urban Outfitters, Body Central shares gapped down to begin their most recent pullback. Gapping down by more than 7% to start its pullback, shares of BODY are already trading higher by more than one and a half percent in two day.

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David Penn is Editor in Chief of