Stitch Fix

Shares of Stitch Fix (SFIX - Get Report) were poised for a big open on Thursday. Shares closed higher by 14.7% at $27.04 on the day, less than half the gain they were sporting in pre-market trading. 

Can shares continue to push higher or should investors bail on the pop?

Leading to the jump is the company's better-than-expected fiscal third-quarter results. Stitch Fix beat on earnings and revenue estimates, and upped its full-year sales outlook. Average revenue per user jumped 8%, while active users climbed 17% year-over-year.

In other words, it was a good quarter. So why can't the stock sustain its gains? While Stitch Fix stock fell on Wednesday, remember that it's still up notably from this week's lows near $22.40. Further, the retail sector in general is struggling right now. Worries over the trade war and consumer spending have hit the sector hard, while names like PVH Corp (PVH - Get Report) , Abercrombie & Fitch (ANF - Get Report) , Kohl's (KSS - Get Report)   Gap (GPS - Get Report) and others have been struggling immensely. Sentiment is pretty poor for this group right now. 

To see what might be next, let's look at the charts for Stitch Fix stock.

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Trading Stitch Fix Stock

Weekly chart of Stitch Fix stock.
Weekly chart of Stitch Fix stock.

Above is a weekly chart of Stitch Fix stock, showing a "big picture" look at its current range and channel. You can see how shares held range support near $22, but are so far being rejected from range resistance (black line) near $29. The 50-week moving average is also rejecting Stitch Fix stock.

On the plus side, though, SFIX stock is bursting through channel resistance (blue line) as well as the 10-week moving average.

Below is the more zoomed-in look with the daily chart. Here, it's clear that Stitch Fix stock is hurdling all three major moving averages, as well as channel resistance (blue line).

Daily chart of Stitch Fix stock.
Daily chart of Stitch Fix stock.

Again, range resistance is keeping the rally contained, as is the 61.8% retracement for the one-year range at $29.95. Thursday's rally has SFIX stock putting in one of its highest volume days over the past 12 months. What now?

The higher Stitch Fix stock can hold up, the better. That said, retracing some of this move wouldn't necessarily undo all of Thursday's positive work. Bulls would love to see shares hold the 200-day moving average at $27.52. If it can't, the 50-day at $25.80 would be the next best thing. 

There's a lot of resistance between $29 and $30, so a move over this area could trigger a significant breakout. For traders who have no position, waiting may be the best course of action. Either wait for a move over resistance or buy SFIX stock on a pullback into support. For the former, a breakout could send shares up to $34. From there, a gap-fill up to $44 would be on the table.

Let's see how Stitch Fix ends the week to see whether bulls or bears will grab momentum in the short term and whether shares will consolidate near current levels or pullback into possible support. 

This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.