Blackwood's announcement is what has me really warming up to BODY here. It's starting to look like BODY is going to be a target for a merger or a private equity deal, since the company has fallen on hard times. I wouldn't be surprised to see more hedge funds and M&A firms taking stakes in shares of BODY in the coming weeks, considering how beaten up the stock is. Those firms might also see a silver lining in comments made by the company on its conference call, regarding its new concept store in Orange Park. Body Central mentioned that the new concept store saw as much as a 30% jump in traffic on a weekly basis. This new store format is significantly outperforming the rest of its store base, and that's something the company could really build on if it can obtain the capital to make it happen and execute more on its turnaround strategy.
>>4 Stocks Breaking Out on Big Volume
Another reason I am starting to warm up to BODY here is that the chart is starting to look very interesting from a technical standpoint. If you take a look at the chart for BODY, you'll notice that this stock gapped down sharply a few weeks ago from close to $2 a share to its low of 86 cents per share. That move has now pushed shares of BODY into extremely oversold territory, since its current relative strength index reading is well below 30. If you pull the chart back on an even longer timeframe, you'll see that BODY has absolutely collapsed from its January high of $4.36 a share. Make no mistake about it; smart funds are moving in here because they think the selling is way overblown.
Shares of BODY have now started to bounce off that 86 cents per share low, with the stock now trending at around $1.18 a share. Another key technical indicator that's starting to draw my attention for shares of BODY here is the MACD momentum indicator that's starting to trigger a bullish crossover. That MACD crossover, if it can sustain, is also happening as the stock nears a key breakout trade.