NEW YORK (TheStreet) -- Because history tends to repeat itself, investors would be wise to consider Ross Stores' (ROST) trading pattern year ago, when its stock hit an all-time high before the clothing retailer issued a warning about holiday spending, which sent the stock spiraling down.
This year, shares of the company, which reports after the bell on Thursday, are close to another all-time high, and comments from the retailer about the holiday-shopping season should determine whether the stock's momentum will continue.
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The shares were trading at $82.66, up 50 cents, on Thursday morning. They're off from an all-time intraday high of $83.10, which was set on Nov. 13. They've since fallen after a downgrade from Canaccord Genuity downgraded on valuation concerns.
Here's how to trade Ross Stores, which includes exit strategies given the stock's momentum.
Investors in Ross Stores shares should enter a good 'til canceled limit order to sell on strength at a key technical level of $86.45 and employ a sell-stop below its key weekly moving average at $79.35, keeping in mind that this average will be rising each week.
If you are looking to buy Ross Stores on weakness, enter a good 'till canceled limit order to buy on weakness at a key technical level of $73.05.
Here's the daily chart for Ross Stores.
Courtesy of MetaStock Xenith
The daily chart for Ross Stores ($82.16) shows that the 2013 momentum run-up began when the stock broke out above its 200-day simple moving average (green line) at $61.35 on April 10, 2013. The momentum period ended with the high at $81.99, which was set on Nov. 18, 2013, two days before the company's disappointing forecast. Shares of Ross Stores began 2014 in a downtrend that last until July, before the stock reversed course.