Short Opp Otw for CPRI?

NYSE:CPRI   Capri Holdings Limited
From a technical standpoint, I can count 4 waves up off of the low, with the 5th now forming in a rising wedge. The rising wedge is rising into a key daily supply zone ($66.50-$70), which is a fresh level and sold off heavily last time we were here. This price action is also taking place below a major monthly resistance. Technicals are suggesting a short opportunity in the aforementioned supply zone, with invalidation being a close above $70.

From a fundamental standpoint, though the company's performance has been improving the past two quarters, the data unfortunately still shows earnings growth coming in negative at -9%. Sales are down from 1.49B two quarters ago, to the present 1.41B, technically representing a decline in the last 2Q.

In spite of a high group rank, good accumulation/distribution action, and good performance against competitors, the sales and earnings data shows CPRI is, at least in the short-term, overvalued, and therefore validates the technical analysis.


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