Discount retailer Ross Stores, Inc. (ROST) has been rising above its 200-day simple moving average since the level was tested as support at $87.73 on Jan. 10. The stock has a gain 14% so far in 2019 and is in bull market territory at 25% above its Dec. 24 low of $75.91.

Consumers love to shop for off-price brand-named apparel and household goods, but the stock had a tough fourth quarter. From its all-time intraday high of $104.35 set on Nov. 8, the stock quickly fell into bear market territory, plummeting 27% to its Dec. 24 low. Investors should realize that the near-term bull market is a consolidation of this bear market.

Ross stock is not cheap, as its P/E ratio is 23.36 and its dividend yield is 0.95%, according to Macrotrends. In addition, the high at $96.21 on Friday, March 1, was a test of my annual risky level at $95.62, a level at which investors should have reduced holdings.

Analysts expect Ross Stores to report quarterly earnings per share (EPS) of $1.13 when the company releases results after the closing bell on Tuesday, March 5. The retailer has reported better-than-expected EPS in the past 10 quarters. The bear market for the stock reflects a year-over-year decline in revenue. Wall Street bulls cite better pricing, cost containment and store expansion plans as positives for Ross stock.

The daily chart for Ross Stores

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

The daily chart for Ross Stores clearly shows the bear market decline that ended on Dec. 24. The Dec. 31 close of $83.20 was a major input into my proprietary analytics. My semiannual and quarterly value levels converge at $89.28 and $89.21, with my annual risky level now a pivot at $95.62. The Feb. 28 close of $94.83 resulted in my monthly risky level at $100.56.

The weekly chart for Ross Stores

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

The weekly chart for Ross Stores is positive but overbought, with the stock above its five-week modified moving average of $92.64. The stock is well above its 200-week simple moving average, or "reversion to the mean," at $67.77. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 84.23 this week, up from 79.48 on March 1. The horizontal lines are the Fibonacci retracement levels of the bear market decline from $104.35 in November to the Dec. 24 low of $75.91. The stock is above its 61.8% retracement at $93.47.

Trading Strategy: Buy shares of Ross Stores on weakness to my semiannual and quarterly value levels at $89.28 and $89.21, respectively, and reduce holdings on strength to my annual and monthly risky levels at $95.62 and $100.56, respectively.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.