Shares of The Kroger Co. (KR) rose more than 8% on Thursday morning after the company reported strong third quarter financial results that helped relieve concerns about competition from Amazon.com, Inc. (AMZN). Revenue rose 4.5% to $27.75 billion – beating consensus estimates by $290 million – and earnings per share of 44 cents beat consensus estimates by four cents per share. Same-store sales also rose 1.1% during the quarter, which surpassed consensus estimates calling for a gain of just 0.9%.

After Black Friday sales beat past records, Kroger expects full-year earnings per share of between $2.00 and $2.05 versus a $1.97 per share consensus estimate. Shares of many other supermarket chains rose in response to Kroger's results, including Supervalu Inc. (SVU) and Sprouts Farmers Markets, Inc. (SFM). Costco Wholesale Corporation (COST) also reported strong financial results earlier this week in a further sign that Amazon-related concerns may be overblown. (See also: Kroger Can Best Weather Grocery Price War: Moody's.)

Technical chart showing the performance of The Kroger Co. (KR) stock

From a technical standpoint, the stock broke out from trendline resistance and the 200-day moving average at $25.12. The relative strength index (RSI) moved to extremely overbought levels at 83.25, but the moving average convergence divergence (MACD) extended its bullish uptrend. Traders should keep an eye on the closing candle on Thursday to determine whether the rally is poised to continue or consolidation is more likely.

Traders should watch for some consolidation above the 200-day moving average at $25.12, given the lofty RSI reading, before an extended move higher. If the stock breaks below these support levels, traders should watch for a move to R2 support at $23.02 or R1 support at $21.80 near the 50-day moving average at $21.33. Traders should maintain a bullish long-term bias on the stock following its technical breakout and strong financial results. (For more, see: Kroger, Hurt by Amazon, Is Restocking Its Shelves.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.