Valero (VLO) - Get Report is in full breakout mode Tuesday.

The oil and gas refiner is up over 5.3% on accelerated trade after reporting solid third-quarter results before the opening bell. This powerful move puts Valero stock on the top five gainers list in the S&P 500.

The stock is now setting up well for more upside.

After dipping below $47 in early July, Valero finally began to bottom. The stock had tumbled 30% from the March peak and entered deeply oversold status per the weekly moving average convergence/divergence indicator.

The rally that followed carried the stock back up to heavy resistance near the April low and declining 200-day moving average. The stock stalled here before suffering a steep selloff in late September.

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Since then, Valero was steadily recovering as earnings neared, but was still below the 200-day. With Tuesday's powerful breakout, the stock has blown through multiple layers of heavy supply and is now clear for more upside.

In the near term, Valero investors should take on a much more positive view. The stock is a buy on weakness. Key support is now in place from just above $58 down to $56. This strong support zone includes the September high near the upper band and last week's high at the lower band.

On the downside, a close back below the $54 area would violate last week's low, sending a clear warning sign in the process.

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This article is commentary by an independent contributor. At the time of publication, the author held was long VLO.