Gap Hit Hard but Wait to Buy Even Lower

 
NEW YORK ( TheStreet) -- Shares of Gap  ( GPS) are breaking down today. The stock is off over 3.5% on very heavy early trade following last night's disappointing April sales figures.

GPS opened with a damaging downside gap that pushed the stock to fresh 2015 lows. A downgrade from FBR Capital is adding additional pressure as GAP sits near the top of the S&P 500 losers list in the early going. This wave of negative news will likely push shares much lower over the coming weeks.

A re-test of the October 2014 spike lows now appears to be a distinct possibility. A very low-risk buying opportunity will develop as the stock begins to pierce the $37 area. This is the top band of a support zone that includes the initial 2014 low of $36.55 as well as the major October low near $34.50. GPS will become deeply oversold as measured by the MACD indicator as this area comes into play.

For GPS bulls, standing aside may prove to be the best strategy. Lower entry levels are ahead.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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