Shares of Polaris (PII) - Get Polaris Inc. Report have been trading in a narrow range this month while underlying support has strengthened. This bullish action has put the stock on course for a fresh rally leg, once the January high is taken out. PII investors should take on a more positive view of the stock as the current pattern develops. At current levels, the stock should be considered a low-risk buy.

Polaris' post-election surge carried shares back above its 200-day moving average before stalling just below $93.00. The stock faded as November came to a close as a sideways consolidation took hold. PII straddled its 200-day for most of its post-election trade, but managed to maintain a healthy string of higher monthly lows. This bullish pattern, which includes five straight higher monthly lows, has provided a solid base for a new rally leg.

PII is still range-bound, but the underpinnings for a fresh rally leg are in place. Once the January peak of $90.40 is cleared, the stock will have room to run. Adding fuel to a breakout is a very high short interest ratio of 10.5. In the near term, PII bulls should consider the stock a low-risk buy near current levels. On the downside, a close back below the $85.50 level would violate this week's low, indicating more sideways action is ahead before a measurable upside move can begin.

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