NEW YORK (TheStreet) -- Shares of Ralph Lauren (RL) are in breakout mode today. The stock is up over 3% on heavy early trade and is trading well above a key overhead trend line that links the April and May peaks. The eight-week pullback that began in early April appears to be giving way to a fresh rally. A retest of the April high near $141 is a logical upside target.
The crushing breakdown in early February, which dropped shares over 18% on near record trade, finally bottomed just below $128. The stock bounced nicely following the March 11 low, rallied back up to heavy resistance near the 2014 low of $141.50, then fell again.
In mid-May, the March low was retested. Two weeks later, as selling pressure slowed to a trickle, the $128 level was pierced once againm but key support here held. One day after closing at a new May low, RL received a well timed upgrade from Goldman Sachs.
RL has been flat since the upgrade, but that has changed in a big way today following the earnings beat from PVH (PVH). According to Jim Cramer, PVH's earning power makes that stock a buy -- and it also makes RL more interesting.
RL now appears to be leaving behind a major base at the March/May lows. Nearby support is now in place in the $134.25-to-$133 area. This zone includes last week's high as well as the 50-day moving average. A light-volume fade back to this area would offer a low-risk buying opportunity. Initial upside target is the $141 area.