Buy This $4 Stock Monday To Lock In 50% Profits

What a week – the markets sold off violently as the full scale of the inflation we've talked about threw a bucket of cold water on the speculative party that's been raging for months now.

Stocks managed to catch a bid on Thursday, but the gains were definitely not evenly spread around; the NASDAQ stayed more or less flat as the other indexes bounced nicely.

But that's the new normal; a permanent state of volatility, courtesy of millions of new retail traders.

Just to make it more interesting, there's a kind of "buyer's strike" going on. See, the market only rallies higher when buyers crowd out the sellers, but off and on for the past few weeks, buyers have periodically fled to the sidelines. Sometimes they don't even buy dips.

This spells trouble for the short-term trend. It spells trouble for tech, too, particularly the FAANGs.

But from where I'm standing, the picture is looking good. I've got to show you this chart – I see a technical situation unfolding here that's likely to send one small stock rocketing 50% or more.

Retail Is the New Tech Right Now

This is why, like I always say, it pays to look at technicals before fundamentals.

I've noticed a severe lack of volume on major exchange-traded funds (ETFs), and their largest component companies have begun dropping yet again, a very strong signal that that buyer's strike I mentioned is continuing through May.

Unfortunately, things are turning more and more dire, since the only volume we're seeing is on select selling surges.

Adding to the pressure, we're entering a more tepid part of the earnings season as the "headliner" companies are now finished dazzling Wall Street.

See, small-cap and retail companies will start to own the after-hours news cycle as the earnings focus shifts to this group.

The retail stocks have taken a break this week as some of the leaders like Gap Inc. (NYSE: GPS), American Eagle Outfitters Inc. (NYSE: AEO), Abercrombie & Fitch Co. (NYSE: ANF), Boot Barn Holdings Inc. (NYSE: BOOT), and others had some profit-taking over the last few days before buyers came poking around on Thursday.

Taking profits is allowed in this market, trend reversals, not so much. The retail stocks continue to hold their trends, which is something that I expect to continue.

In addition, the retail sector is among the "late reporting" stocks during earnings season. This means that we're going to see earnings reports on the calendar for these companies soon, which also means that the "buy the rumor" traders will start buying again.

Here's where you want to be when that starts.

Buy This $4 Retail Superstar

The fashion clothing company Chico's FAS Inc. (NYSE: CHS) is a bit of a blast from the past for me; CHS was one of my favorite stocks to trade at one point, but it's had a rough go of it for the past five years or so.

This year, well, it's a different story.

Year to date, CHS shares are up more than 135% (one hundred thirty-five percent: that's not a typo) as the reopening trade is now including companies and retailers that have a hand in people returning to the office, which will bolster demand for business casual attire.

That's right – this is the "anti-sweatpants trade," and I think it's going to tack another 50% to the share price.

CHS's shares are building another "silver cross" pattern as the 20-day moving average is crossing back above the 50-day, but there's more to this trade. Chico's stock has gone "quiet" over the last month as we've seen the stock consolidate in a range. The drop in volatility is suggesting to me that we're going to see an aggressive move in the share price.

The trend in the stock is flashing signals that the volatility move is more likely to be to the upside as earnings approaches in early June. Buy this stock in the neighborhood of $4 – you won't be sorry. Sell it when it gets to $6 or hang in there and watch it shoot past $8.

Chico's isn't exactly the obvious choice for a monster profit play, but the charts don't lie.

Disclaimer: Any performance results described herein are not based on actual trading of securities but are instead based on a hypothetical trading account which entered and exited the suggested ...

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