Bullish Trend in Store for ROST

The short-term has Ross Stores mixed, but the longer trend is for a rise higher.

During Friday's "Mad Money" program, Jim Cramer said he would be watching earnings from Ross Stores (ROST) on Tuesday. He said he expects ROST to be the only bright spot among a number of companies reporting that day. Let's check out the charts of ROST.

In this daily bar chart of the Trifecta Stocks holding, below, we can see the uptrend in the share price of ROST and the recent quick decline. Prices plunged below the cresting 50-day moving average line and tested the rising 200-day moving average line. The trading volume increased on the recent decline and the On-Balance-Volume (OBV) line made a lower high in February than January, even though prices made a higher high. This bearish divergence foreshadowed weaker prices. The Moving Average Convergence Divergence (MACD) oscillator made a double top in January and February and just gave an outright sell signal as it moved below the zero-line. 

 

In this weekly bar chart of ROST, below, we can see that shareholders have done very well over the past three years. Prices are above the rising 40-week moving average line again today after Friday's close below it. The weekly OBV line is steady and the MACD oscillator has weakened only recently. 

 

 

In this Point and Figure chart of ROST, below, we used daily price data. The price action suggests a potential downside price target in the $91 area. A trade at $122.94 will refresh the uptrend. 

 

 

 

Bottom line strategy: I would look for ROST to rally back into the $115-$120 area for some rebasing before an attempt at new highs. Cautious traders should wait for a trade at $122.94 before returning to the long side.

 

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