Shares of Northrop Grumman (NOC) - Get Report are in full breakout mode today. The stock opened the session with a powerful earnings-inspired breakout gap that lifted the stock past a major supply zone. At midday, Northrop Grumman was stabilizing with a 3% gain and is set up well for more upside.
Back in early September, the stock appeared headed for a new down leg. It had taken out the Brexit low but further loses were very limited.
Northrop Grumman quickly recovered, and four weeks later was trading back up near the highs.
Heading into this week's earnings report, the stock had firmed up nicely but was still well below heavy resistance near the summer peak. It was clear the stock would need a major jolt to clear this area.
This morning, Northrop Grumman received just that. It is now well above the major base near the June and September lows.
In the near term, patient investors should keep a close eye on the $224.20 to $220 area. This zone will serve as very solid support as today's breakout move develops. A light volume retest of this area will provide bulls with a very low risk entry opportunity.
On the downside, a close back below $216.00 would violate this week's low, sending a clear warning sign in the process.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.