Macy's (M - Get Report) is stuck in a similar setup right now. Like Staples, Macy's has been bouncing within its channel since August, climbing more than 63% since the middle of that month. A return to trend line support this week could be an optimal entry in this stock.
Macy's hasn't had as many successful tests of support as Staples has. Successful tests of support are a good thing because they clue us into the strength of that trendline support level. For that reason, it's important to get a stronger bounce off of support than we'd want to see in Staples. Today's trading session could provide that.
It's also important to keep an eye on the converging dashed trend line in the chart above; it's been acting as trend line resistance since early November, and could reign in some of Macy's upside potential. That said, a shove above the dashed line is likely to accelerate this stock's climb.If you decide to be a buyer here, I'd recommend keeping a stop on the other side of the 50-day moving average. As of the most recently reported quarter, Macy's is one of the top holdings at David Tepper's Appaloosa Management. To see this week's trades in action, check out the High Volume Technicals portfolio on Stockpickr. -- Written by Jonas Elmerraji in Baltimore.
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