Bull Chart of the Day: Retail Stock Conn's Becomes Intriguing

NEW YORK (Real Money) -- While energy is taking a little breather as equities rocket higher Friday morning, it is time to expand the horizons a bit on the bullish side.

I'm not a huge fan of retail from the fundamental side and one name I saw issues with in the past was Conn's  (CONN), based on its aggressive use of credit. While the stock did suffer from an over-abundance of low-quality credit customers, the chart now seems to indicate those concerns may be in the rear-view mirror.


The culmination of concerns and bearishness hit in December 2014 and continued through February when CONN started a massive turnaround on the charts. The stock has now completely filled the huge gap left in December. Normally, as a gap is filled, I would not be too bullish, but the stock has not just filled the gap here -- it has filled the gap and now consolidated, which is exactly what you want to see. A pause at the gap fill is a good chance for all the remorseful November bulls (buyers) to be replaced with new bulls. Same price, but less scars.

The stock has set into a cup-and-handle pattern that it is trying to break out from today, although I think early next week is more likely. While no one indicator has been a solid buy trigger, using a combination has worked well. For instance, buying the relative strength index (RSI) when it moves over 50 in conjunction with a bullish crossover on the slow stochastics was a good May entry. This was a nice combination of trend and momentum.

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