Kraft Foods

While Kraft Foods ( KFT) isn't a retailer, as the largest consumer food and beverage company in North America, Kraft has significant retail presence. And right now, an "if/then trade" setup in shares is providing a solid breakout trade opportunity for investors.

Put simply, an if/then trade happens when a stock is trading in a well-defined horizontal range. It's a setup whose direction is contingent on the direction of the breakout from the range. So in Kraft's case, if shares break out above resistance (just below $36), then it becomes a buy. If shares break down below support (at $32.50), then Kraft becomes a short candidate.

Normally, if/then trades don't have any directional bias when they're in the channel. In Kraft's case, though, 14-day RSI (a momentum indicator) is posting a positive divergence from price, hinting at upside bias. Since momentum is a leading indicator, that's a good indication of a breakout to the upside, particularly with shares right under that resistance level right now.

That doesn't mean that it makes sense to buy Kraft right now -- wait for the breakout to $36 before taking a position in this stock.

Kraft, one of TheStreet Ratings' top-rated food stocks, remains one of Warren Buffett's top stocks as of the most recent period.

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