Of all of the struggling retailers, the one that should be fine is Ross Stores (ROST). But what’s piquing my interest in ROST isn’t just how fundamentally undervalued it’s become, it’s how technically oversold it is at its 200-day moving average.
First, we can see just how oversold ROST is on relative strength, MACD and Williams’ %R, but also take a look at the history of the stock at its 200-day. Since the start of 2016, each time the stock dips even slightly below that average, it snaps back not long after, especially between June and July 2016.
All of those indicators combined leads me to believe ROST is now overdue for a move higher. And we’re recommending two ways to trade the opportunity. One, consider buying to open the ROST May 2017 62.50 call at market. And, or two buy to open the May 65 call at market as well. Both should do well. To protect these trades from unforeseen chaos, have a -35% stop loss.