Bloomberg News

Discount retailer Ross Stores (ROST - Get Report) extended its winning streak of beating analysts' earnings-per-share estimates to 13 consecutive quarters when it reported better-than-expected earnings after the close of trading Thursday. Even so, the stock slumped Friday on concern about the pending 10% tariffs on apparel and footwear made in China. My call is the buy the stock on weakness to its semiannual pivot at $102.56.

Ross Stores closed Thursday pre-earnings at $107.40, up 29.1% year to date and in bull market territory 41.5% above its Dec. 24 low of $75.91. The stock set its all-time intraday high of $108.20 on July 19, with a positive but overbought weekly chart.

The stock is not cheap as its P/E ratio is 24.34 and dividend yield of just 0.98%, according to Macrotrends. Ross Stores is where consumers shop to find brand named apparel at discounted prices. Shoppers love to comb the items at Ross Stores like treasure hunting. The retailer reported respectable results and same-store sales are projected to increase modestly through the 2019 holiday season. Here's more on the details of the earnings report.

Save 57% With Our Labor Day Sale. Join Jim Cramer's Action Alerts PLUS investment club to become a smarter investor! Click here to sign up!

The Daily Chart for Ross Stores

Courtesy of Refinitiv XENITH

The daily chart for Ross Stores shows the formation of a "golden cross" on March 6 when the 50-day simple moving average moved above the 200-day simple moving average to indicate that higher prices lie ahead. With this positive in play, investors could have bought the stock at its 200-day SMA at $90.34 on March 8. The annual pivot at $95.62 was a magnet between March 1 and June 6 as the stock marched to its all-time intraday high of $108.20 set on July 19. The close of $99.12 on June 28 was an important input to my proprietary analytics and resulted in a semiannual pivot at $102.56 and a quarterly risky level at $115.87. The monthly pivot for August at $104.64 expires next Fri., Aug. 30 so it will not be used as an action level anymore other than to say it's been a magnet on Aug. 23.

The Weekly Chart for Ross Stores

Courtesy of Refinitiv XENITH

The weekly chart for Ross Stores is positive but overbought with the stock above its five-week modified moving average of $103.56. The stock is well above its 200-week simple moving average or "reversion to the mean" at $73.64. The 12x3x3 weekly slow stochastic reading is projected to slip to 81.13 this week down from 82.33 on Aug. 16. A close on Aug. 23 below $103.56 with the stochastic reading falling below 80.00 will result in a negative weekly chart.

Trading Strategy: Buy weakness to its semiannual and annual value levels at $102.56 and $95.62, respectively, and reduce holdings on strength to its quarterly risky level at $115.87.

How to use my value levels and risky levels:

Value levels and risky levels are based upon the last nine weekly, monthly, quarterly, semiannual and annual closes. The first set of levels was based upon the closes on Dec. 31. The original annual level remains in play. The weekly level changes each week. The monthly level was changed at the end of each month, the latest on July 31. The quarterly level was changed at the end of June. My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility investors should buy on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before its time horizon expires.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.