Fossil Group Inc. (FOSL) delivered strong fourth quarter numbers and shares almost rallied 20% in after-hours trading. Price action now appears poised to trade above the 50-day SMA for the first time in over 10-months.
Fossil reported a fourth quarter gain of $1.46 a share, a beat over the $1.29 analyst estimate. Revenue printed at $992 million, almost 7% lower than the same quarter last year, but higher than the estimated $919 million. The company attributed some of the increased sales from the new website. Revenue guidance for 2016 also came in at $3.11-3.25 billion, above the analyst consensus of $3.00 billion.
Price action on the Fossil 240-minute chart show that the initial rally took price to a 3-month high. Price is also breaking out towards major downward sloping resistance that has been in place since the June 2015 high of $73.51. If the bullish rally continues, the next resistance level may come from the $46.50 to $47.00 zone. Major resistance will come from the psychological $50 handle.
If the $41.00 area is respected major support will come from the $35.00 handle.
The Trade: Buy Fossil shares at $37.50, with a stop loss of $35.50 and take profit of $43.50. The risk/reward ratio is 1:3.