Breaking down the chart in Fossil Group, Inc

I mentioned today that $FOSL was “clearing the past weeks range and could be ready to attempt a move towards yearly highs” and I received a response asking why I thought it was headed to new highs. Of course I don’t know that its headed to new highs, but the price action is leading me to believe it will attempt to make a run at this years highs. I’ve received other questions recently on what I look for and thought it would be a good idea to break down what I see in the chart.

Fosl

$FOSL had a strong gap on earnings in August that has resulted in a lengthy consolidation. It really had no follow through and traders that bought that gap are likely frustrated with the stock. However, $FOSL had already run up into earnings before the breakout and investors that were holding prior to the earnings gap are still comfortably in the money. The reason I mention this is that the price action in $FOSL is typical of a healthy consolidation. Sure the failure to continue running after earnings may be seen as a sign of weakness, but the stock never really reversed, and $FOSL has quietly been finding support on dips.

Traders have been willing to pay higher prices on recent trips to the 50-day moving average and $FOSL is now on the cusp of breaking over several week highs. So the short answer is I like this chart because it MAY be near the end of a consolidation, and its recent highs should act as a magnet if it can clear the mid 119’s. Overall its a bullish stock in a good sector. Whether it gets there or not, there are enough signals in the chart to have made it attractive to me.

That being said, I don’t own this stock as I already had enough risk on with my current portfolio, but hopefully breaking it down this way may be of value to some of you.

 

Good Trading,

Joey

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The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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