Another stock that looks poised to trigger a major breakout trade is Aeropostale ( ARO), which operates as a mall-based retailer of casual apparel and accessories for young women and men in the U.S. This stock has been destroyed by the sellers so far in 2013, with shares off by 31%.
If you take a look at the chart for Aeropostale, you'll notice that this stock has been downtrending badly for the last month and change, with shares plunging from its high of $15.73 to its recent 52-week low of $7.78 a share. During that downtrend, shares of ARO have been consistently making lower highs and lower lows, which is bearish technical price action. That said, shares of ARO have now started to rebound sharply off that $7.78 low and are quickly moving within range of triggering a major breakout trade.Traders should now look for long-biased trades in ARO if it manages to break out above its gap down day high of $9.55 a share with high volume. Look for a sustained move or close above that level with volume that hits near or above its three-month average action 3.12 million shares. If that breakout hits soon, then ARO will set up to re-fill some of its previous gap down zone from August that started near $11.50 a share. If that gap gets filled with volume, then ARO could even hit $12 to $13 a share. Traders can look to buy ARO off any weakness to anticipate that breakout and simply use a stop that sits right below its 52-week low of $7.78 a share. One could also buy ARO off strength once it takes out $9.55 a share with volume and then simply use a stop that sits a comfortable percentage from your entry point.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV