Ross Stores Surges 4.78% as Bullish Signals and Golden Cross Fuel Breakout Hopes

Candlestick Theory

Ross Stores (ROST) has exhibited a bullish reversal pattern in recent sessions, with a sharp 4.78% gain on October 13, closing at $154.77. The candlestick formation suggests a potential breakout from a consolidation phase, as the price surged above the prior week’s high of $151.64. Key support levels are identified at $147.71 (October 10 close) and $144.67 (September 22 close), while resistance is likely near $155.41 (October 13 high). A breakdown below $147.71 may trigger further downside, whereas a sustained close above $155.41 could confirm a trend reversal.

Moving Average Theory

Short-term momentum is reinforced by the 50-day moving average (DMA), which has crossed above the 200-day DMA, forming a "golden cross." As of October 13, the 50DMA is positioned near $149.50, while the 200DMA resides at $147.00, indicating a bullish bias. The 100DMA at $148.30 further aligns with the 50DMA, suggesting a cohesive uptrend. However, the 200DMA remains a critical long-term reference; a retest of this level may trigger a pullback if the 50DMA fails to maintain dominance.

MACD & KDJ Indicators

The MACD histogram has turned positive, with the MACD line crossing above the signal line, signaling strengthening bullish momentum. Concurrently, the KDJ stochastic oscillator shows %K at 82 and %D at 78, indicating overbought conditions. While this may suggest a near-term correction, the divergence between rising prices and flattening %K lines implies caution. The RSI, at 72, corroborates overbought territory, but the lack of bearish divergence (price highs > oscillator highs) suggests the uptrend remains intact for now.

Bollinger Bands

Volatility has expanded significantly, with the upper band at $155.41 (October 13 high) and the lower band at $144.67 (September 22 low). The current price of $154.77 is near the upper band, indicating a high-risk zone for overextension. A retest of the lower band may offer a more favorable risk-reward profile, as the bands suggest a potential consolidation phase if volatility contracts.

Volume-Price Relationship

Trading volume surged on the October 13 rally, with 3.21 million shares traded—well above the 30-day average of 2.5 million. This supports the sustainability of the price move, as increased participation validates the bullish breakout. However, a decline in volume during subsequent sessions may signal waning momentum, necessitating closer monitoring of follow-through.

Relative Strength Index (RSI)

The RSI has entered overbought territory at 72, suggesting potential exhaustion in the short-term rally. While this does not guarantee an immediate reversal, it highlights a probabilistic inflection point. A drop below 50 would indicate a shift in sentiment, whereas a sustained move above 70 may prolong the uptrend. Given the recent earnings-driven optimism, the RSI’s overbought reading is less concerning than in a structurally bearish context.

Fibonacci Retracement

Key Fibonacci levels derived from the October 13 high ($155.41) to the September 22 low ($144.67) include 38.2% at $150.26 and 61.8% at $147.85. A retest of the 38.2% level may act as dynamic support, while a breakdown below 61.8% could trigger a deeper correction. The 50% retracement at $150.04 aligns with the 50DMA, offering a confluence of technical significance.

Backtest Hypothesis

The backtest strategy, which triggers buys when RSI exceeds 70 and sells when it drops below 30, yielded a 70.46% total return from 2022 to October 13, 2025, outperforming the benchmark by 21.76%. This aligns with ROST’s recent overbought conditions and validates the strategy’s efficacy in capturing momentum-driven rallies. The strategy’s Sharpe ratio of 0.90 and 0% max drawdown suggest low volatility and strong risk-adjusted returns, likely due to ROST’s structural strength from store expansions and earnings resilience. However, the absence of drawdowns raises questions about market conditions during the backtest period, and caution is warranted if volatility normalizes.