Ross Stores (ROST) surged over 4.3% on Friday, putting it in the No. 3 spot in the S&P 500's gainers list. This powerful earnings-inspired surge drove shares to new all-time highs as volume swelled to its heaviest level since May. More upside is likely for this A-rated company in the near term.
After building a very solid base near its 200-day moving average in mid-May and well into June, Ross Stores was poised for a healthy move. As June came to a close, the stock was in full rally mode, and just under eight weeks later it was up nearly 25%. This impressive post-Brexit surge moved shares well into overbought territory, as the $66 level came into play.
In the 10 weeks that followed, Ross Stores traced out a near-perfect bullish pennant, while the $61 area held support. Heading into earnings, the stock was poised for a breakout -- and that's exactly what investors saw on Friday.
In the near term, patient Ross Stores investors should consider the stock a buy on weakness. The stock now has layers of support in place and has worked off all of its August overbought reading. A dip back down to the $66.30 to $65 area would retest a very solid support zone that includes the August high near the upper band and the October high near the lower band.
On the downside, a close back below $62 would take out last week's low, indicating a failed breakout.