For investors who use charts and price action to guide their choices, the search for promising opportunities often centers on two main questions: which stock is in a solid trend, and when is the correct time to enter that trend? A systematic way to answer these questions involves looking for stocks that show both sound technical condition and a high-grade consolidation pattern, indicating a possible breakout is near. This method centers on finding market leaders that are pausing before their next move up, providing a more distinct entry point with clear risk.
One stock currently matching this description is Ross Stores Inc (NASDAQ:ROST), the national off-price apparel and home fashion retailer. According to a recent technical scan, ROST presents a strong case for technical investors looking for a breakout candidate.
Examining the Technical Base
The first part of this method is finding a stock with fundamental technical soundness. This is important because a breakout from a poor base is more prone to fail. The ChartMill Technical Report for ROST gives the stock a full Technical Rating of 10 out of 10, showing outstanding technical condition. This highest score is backed by several main factors:
- Steady Positive Trends: Both the short-term and long-term trends for ROST are marked as positive. This agreement across periods points to a maintained and good upward momentum, not a temporary rally.
- Solid Relative Performance: The stock is doing better than 83% of the whole market over the last year and is in the top group within its Specialty Retail industry. This shows leadership and institutional support.
- Price Above Important Averages: ROST is trading well above its main moving averages (20, 50, 100, and 200-day SMAs), which are all in rising arrangements. This formation is typical for a stock in a solid uptrend.
- Trading Near Highs: The stock is currently near its 52-week high, a mark of strength that often comes before more gains when paired with the right condition.
This full technical rating answers the "which stock" question, confirming ROST as a market leader with a high chance of continuing its established uptrend.
Judging the Condition Quality
A solid trend by itself is not a buy signal; entering after a sharp rise holds notable risk. The second part of the method is finding a high-grade condition—a consolidation phase that gives a logical entry point and a place to set a protective stop-loss. ROST does well here too, receiving a Setup Rating of 9 out of 10.
The report states that ROST has been trading in a narrow range over the last month, between about $184.70 and $194.90. This time of lower volatility and sideways movement after a prior rise is the consolidation base the method looks for. Main features of this condition include:
- Clear Resistance and Support: The analysis finds a definite resistance area just above the current price, starting around $192.37. A clear move above this area could mark the start of the next breakout. On the other hand, a firm support area exists below, focused near $190.53, which can act as a guide for risk management.
- Positive Action: The existence of a recent "Pocket Pivot" signal—a price move up on higher volume than any down volume day in the previous ten sessions—hints at accumulation, a good sign of institutional buying during the consolidation.
- Practical Trade Guidelines: Based on this pattern, the technical analysis proposes a possible breakout entry point just above the resistance at $193.81, with a stop-loss order placed below the recent range around $184.68. This sets the trade's risk at about 4.7%.
This high setup rating deals with the "when to buy" question, showing that ROST is not overstretched but is instead tightening within a clear range, preparing for a possible measured move higher.
A Candidate for a Technical Breakout
ROSS STORES INC brings together the two necessary parts looked for by this technical breakout method: top technical soundness and a high-grade, practical condition. The full Technical Rating of 10 confirms it is a leading stock in a solid uptrend, while the Setup Rating of 9 shows it has formed a positive base from which to start its next rise. For chart-focused investors, this combination of factors makes ROST a stock to watch for a possible breakout above the noted resistance level.
Find More Possible Breakout Conditions
The scan that found ROSS STORES INC is run each day to sort the market for similar opportunities. If you want to see other stocks currently displaying solid technicals and high-grade conditions, you can see the current list of results here: Technical Breakout Setups Screen.
Disclaimer: This article is for information only and does not form investment advice, a suggestion, or an offer to buy or sell any security. The analysis is based on technical data and automated reports. Investors should do their own study, think about their financial position and risk tolerance, and talk with a qualified financial advisor before making any investment choices. Past results are not a guide to future results.
