My indicators have switched back to giving bullish signals, and because I’ve recommended several bearish trades in the past two weeks, I am recommending a bullish call option on The Buckle, Inc. (NYSE:BKE), the casual apparel retailer.

The S&P 500 index jumped to a new all-time closing high on Wednesday, erasing all the losses of the prior two weeks.

While it does seem that the coronavirus-related selling was overdone and that the authorities are starting to get the situation somewhat under control, I think there are some other economic factors at work that are helping to push the market higher.

A Healthy Pullback Before a Strong Jobs Report

As you can see in the chart of the S&P 500 below, the index broke through its short-term support level at 3,260.

Daily Chart of S&P 500 Index (SPX) — Chart Source: TradingView

The index dropped 1.8% that day, but it was able to find a secondary level of support at 3,215 and its 50-day moving average (red line).

Traders typically look at 50-day and 200-day moving averages for clues about market direction, as they help to smooth out the day-to-day volatility in the market. And in cases like this, moving averages can also act as levels of support or resistance.

From peak to trough, the S&P pulled back by about 3.7%. This seems to me like a very healthy correction for a bullish trend that could set up the market to move even higher in the intermediate term.

In addition to the market’s technical picture, I’ve also been following the economic news showing the U.S. economy remains in fine shape.

On Wednesday, ADP Research reported that private employers added 291,000 jobs in January — up from 199,000 in December. January’s number was nearly double the 150,000 figure that economists expected and marked the best monthly gain since 2015.

This paints a good picture for the U.S. consumer, and that could be good for BKE, which has already been performing well.

Challenging Resistance at $27

BKE has been consolidating between the $24 and $27 levels since late November. According to a January press release, the company’s holiday sales for 2019 increased by 5%, which is likely why the stock has been able to stay within its trading range.

That press release also announced that the company’s comparable store net sales for the 48-week period ended Jan. 4, 2020 increased 2% from the same period last year.

Looking at the chart below, you can see that BKE jumped with the rest of the market yesterday. Given the excellent market conditions and BKE’s own performance, I wouldn’t be surprised if the stock continued rising.

Daily Chart of The Buckle, Inc. (BKE) — Chart Source: TradingView

If the rest of the market is pushing higher, there’s no reason BKE won’t follow. The company’s sales figures could mean it’s in for a positive earnings report on March 13, and with more jobs being created, retail stocks should participate in a broader rally.

If the stock can break above $27, its next resistance level is in the $28-$29 range. As long as the consumer remains strong, I think it can move on to challenge those levels.

Buy to open the Buckle, Inc. (BKE) June 19th $30 Calls (BKE200619C00030000) at $1.40 or lower.

InvestorPlace advisor Ken Trester also brings you Power Options Weekly, which delivers 5 new options trades and his latest trading advice to you each Friday. Trester has been trading options since the first exchanges opened in 1973 with a winning streak that goes back to 1984 with money-doubling average annual profits since 1990.