Want a discount? Go to Ross Stores (ROST). (August 01, 2015)
I want to look at Ross Stores ( NASDAQ:ROST ) here. They report earnings August 20th so they’ve got about three weeks to go before there’s any real catalyst for a movement on the stock. Look at how this stock has been trading, a downtrend yes, you could say, “Oh, well it’s been a broadening pattern.” Well that’s fine, I would actually even say that.
This kind of pattern, it tends not to just keep going, where lower, lower, lower, lows and highs and this and this and that. At some point this is going to turn around and this what’s happened. So this stock ultimately hits a bottom here, here’s the 2-for-1 split and the stock continues to trade up after the split. This is what we like to see in a stock because a lot of times stocks tend to be moving higher because the fundamentals are okay, but investors want to own the stock, and there’s not that many shares.
Then when they do a stock split they cut the price in half, which is nice for retail traders and who would rather buy 100 shares of a $10.00 stock verses 10 shares of a $100.00 stock, or 1 share of a $1000.00 stock, so they keep the price down to keep retail investors interested in the stock. But intuitions are the ones that actually make it move.
And so if they’re having a hard time buying the stock because of the liquidity then when liquidity is increased, like two-fold here, then a lot of times a stock will start to drift lower. It just shows you that the reason for the uptrend was the lack of liquidity. Well we’re seeing the opposite here. The stock split and it still continues to move higher.
So I’m looking at this and I think certainly you can be buying the stock if it starts trading above 54.00; but for my money I would even want to be buying it right now. If you want to buy it right now hold it into earnings; see what the stock looks like prior to earnings. But to me this has just been one big, long painful consolidation pattern. If you happened to buy here you probably sold somewhere down here. It’s been a long consolidation pattern, I think Ross ( NASDAQ:ROST ) goes higher.
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