NEW YORK (TheStreet) -- Charles Schwab (SCHW - Get Report) finished Thursday's session with a 3.3% gain on very heavy trade after reporting better-than-expected earnings. This breakout powered shares to new 52-week highs after easily clearing heavy resistance near the June highs.
Schwab has been moving well since last Wednesday's low and is set up well for more upside. June's multi-week highs near $33.90 should serve as solid support as Thursday's impressive breakout develops.
In the near term, Schwab is becoming a bit extended. Since the middle of last week, after the stock plowed through a key underlying trend line on heavy selling pressure, Schwab began a sharp reversal. From the lows on Wednesday, July 8, shares have put together a string of six straight higher lows while surging more than 10%.
Despite this sharp up move, the stock remains well below overbought levels, according to the moving average convergence/divergence indicator, but it may still need a rest soon. A Friday follow-through rally is likely with the help of a few upgrades, but next week may bring a healthy pullback and consolidation.
For patient bulls, waiting out a pullback will provide lower entry levels. The news-inspired ramp on Thursday left behind a very solid support zone between $33.80 and $33.35. This key area includes Schwab's June peak at $33.78 as well as last week's high of $33.38. A short-term base in this area will give the stock a much deserved rest while setting the stage for another thrust higher.