Foot Locker (FL) is had a solid close after opening Tuesday's session with a powerful upside gap. An upgrade from Morgan Stanley gave the stock quite a pre-opening spark. FL lost some of its early momentum late in the day but layers of support are now in place. Investors should take advantage of a pullback in the coming sessions.

On May 19, Foot Locker suffered a major breakdown. This earnings-inspired flush, which dropped the stock more than 15%, extended a steep selloff from the May peak. FL stabilized as the month came to an end but by early June, a fresh down leg was underway. The stock eventually fell another 25% before finally reaching deeply oversold territory as the $45.00 area came into play. One month later, it was clear FL was building a base after a successful retest of the June low. FL has been steadily improving since this retest in late July, leaving behind what may prove to be a major bottom.

Following Tuesday's breakout gap, patient investors should view the $50.00 to $49.00 area as a low-risk buy zone. This key area includes last week's high as well as this morning's breakout gap. If shares can maintain their footing above this zone, a healthy rebound move could follow. On the downside, a close back below $47.50 would violate this week's low, indicating more basing is ahead.

Also of note, FL is scheduled to report its second-quarter results before the bell on Aug. 18.

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