Discount retailer Ross Stores, Inc. (ROST) reports quarterly earnings after the closing bell on Thursday, May 24. The stock is trading between my semiannual pivot of $78.79 and my annual risky level of $85.13, which was tested at the Jan. 29 high. Ross shares closed Wednesday at $82.61, up 2.9% year to date and down 3.6% from the Jan. 29 high of $85.66. The stock is in recovery mode at 12% above its March 7 low of $73.76.

Analysts expect Ross Stores to post quarterly earnings per share of $1.06 when it reports results on Thursday. The stock has had a positive reaction to earnings for four consecutive quarters. The question is keeping up foot traffic in stores as consumers comb the racks for off-priced brand-named apparel and lucky-to-find home accessories. Ross Stores is in growth mode, opening new locations as consumers want to save a buck. (See also: Amazon Can't Beat These Off-Price Rivals: JPM.)

The daily chart for Ross Stores

Daily technical chart showing the performance of Ross Stores, Inc. (ROST) stockCourtesy of MetaStock Xenith

Ross Stores has been above a "golden cross" since Nov. 3, when the stock closed at $64.13. A "golden cross" occurs when the 50-day simple moving average rises above the 200-day simple moving average, indicating that higher prices lie ahead. After the stock set its 2018 high of $85.66 on Jan. 29, the correction took the stock to as low as $73.76 on March 7. Note that the highest horizontal line is my annual risky level of $85.13, which was tested at the 2018 high of $85.66. The second horizontal line is my semiannual pivot of $78.79, which was a magnet between Feb. 5 and May 2.

[Check out Chapter 2 of the Technical Analysis course on the Investopedia Academy to learn more about using moving averages to develop your trading strategy]

The weekly chart for Ross Stores

Weekly technical chart showing the performance of Ross Stores, Inc. (ROST) stockCourtesy of MetaStock Xenith

The weekly chart for Ross Stores is positive, with the stock above its five-week modified moving average of $80.51. The stock is well above its 200-week simple moving average of $58.39, which is the "reversion to the mean." The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 73.08 this week, up from 67.48 on May 18.

Given these charts and analysis, investors should buy Ross shares on weakness to my semiannual and quarterly pivots at $78.79 and $77.87, respectively, and reduce holdings on strength to my annual risky level of $85.13. (For more, see: Discount Retailer Ross Stores May Suffer Slump.)

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