Revlon Charts: Scale Into This Trade

By L.A. Little of tatoday.com, author of Trade Like the Little Guy.

Sometimes a stock can fall hard, fast and very far. The small-cap stock we look at today has done all three. Revlon(REV Quote) has huge name recognition and once traded at the equivalent of more than $450 a share. But it now trades at $17, and that's after having tripled over the past month. What is so appealing is that in my work, even though this stock has made a triple, it has much further to go over time.

Start with the long-term trend. The long-term time frame is for a little more than a decade. I pulled it back this far to show three significant items:

• Just how far Revlon has fallen
• The downtrend line for a decade now has been broken.
• Long-term resistance that is dead ahead.

With volume expansion, the downtrend on Revlon has, without a doubt, been broken. This is important and huge. It doesn't mean that REV will continue to run at the recent pace, but it does say that you should buy retraces and build positions over time unless the charts significantly change.