Fossil (FOSL) is a leader amongst its retail peers, not only for its great growth but also the appreciation of its stock price. The 350+ store retailer selling accessories and watches has been on a role since its breakout in August 2010.
Breakouts like Fossil’s in 2010 are not seen too often, but when they take place they can be the start of massive moves. The success of the stock and its appeal to CANSLIM investors makes it a perfect fit for the Monster Breakouts Education Series.
The goal of this education series is very straightforward. I want to find the best stocks with the cleanest breakouts post the 2008 crash. Then, I want to break down the setups that allowed these breakouts to take place for easier identification in the future.
First, I have a daily chart showing how Fossil’s setup developed over 3.5 months. Key points are broken down below the chart. Interesting how very similar FOSL’s chart is to this monster breakout by BEXP in 2010.
1. After finding support multiple times at its uptrending 200 MA, FOSL formed a nice tight flag that lead to the break through $41.20. This was the first technical buy point for the stock.
2. FOSL posts positive earnings and gaps through key resistance at $43. Investors should note that the high on this day was $46.30, just $.05 above the stock’s all-time record high set way back in December 2007 (see the weekly chart below).
The gap range was filled with support found at $43. This is an important distinction as resistance became support, exactly what bulls look for in a pull back. This was the structure for a nice tight horizontal flag that lead to the break at #3.
3. Volume returns as FOSL doubles its daily average shares traded and surges to fresh all-time highs above $46.30. This was the proper follow up buy-point for FOSL and was the start of what has turned out to be a fantastic move for the stock.
To see how Fossil has fared since its monster breakout, view the weekly chart below. Take note of the huge cup & handle setup that had formed over the last three years.
Since its primary breakout in August of 2010, Fossil stock has returned over 223% for investors and as of this post is trading at about $133 per share.