Playing the Momentum Building in Aeropostale

Published on Wednesday, 30 June 2010 04:48 Written by Christian Paolinetti

New York, June 30th (TradersHuddle.com) - Shares of Aeropostale, Inc. (NYSE:ARO) closed the trading session at $28.81 placing the price action in a very tight range, given that calculated support is set at $28.80 and the calculated resistance based on an algorithm of peaks and troughs is set at $30.36

Aeropostale?s (NYSE:ARO) principal activity is to retail casual apparel and accessories for both young women and young men aged eleven to twenty. The company offers a focused collection of fashion basic apparel, graphic t-shirts, tops, bottoms, sweaters, jeans, outerwear and accessories. It also provides customers with a focused selection of active-oriented, fashion basic merchandise at compelling values. Trademarks include AEROPOSTALE and AERO. The company has operations in Alabama, Arkansas, Colorado, Georgia, Indiana, Iowa and other states.

Aeropostale's stock price action indicates that both sellers and buyers are materializing very close to each other, which is indicative to a momentum building area, as the stock can resolve by breaking out of the tight range that developed.

Traders wanting to establish a position should place close attention to Aeropostale's price action, as any movement outside its predefined range of $28.80 and $30.36 could grab the attention of momentum buyers, looking for a big movement in the price of the stock. Traders need to be aware that tight range resolution works both ways, hence, a move below support at $28.80 could spark above average selling. A tiered approach can be a good way to approach starting a position in Aeropostale's, by establishing a starter position while the stock is in the tight range, and then adding to the position as it breaks and closes above resistance.