Guess (NYSE:GES) designs and distributes lifestyle clothing and operates about 425 stores in the U.S. and Canada and about 100 stores outside of North America. The three-year weekly chart below shows a solid uptrend over the past 24 months.  In 2010, the stock found resistance twice just north of $51, which has led the stock to trend down so far in 2011 and form a sort of bull flag formation (blue lines) marked by a series of lower highs and lower lows.

If we look at a daily chart dating back to last August, several things stick out.  First, note the uptrend line (red-dotted line) that the stock closed below on Wednesday.  Second, the stock is trading below both the 50- and 200-day simple moving averages.  The stock now should have room to fall as low as the lower end of the downward sloping channel (blue lines).

I often say how important it is to look at the markets in multiple time frames as it helps with risk management and gives a better perspective of the market’s current standpoint.

That helps in this case, too.  The shorter-term trade apparent on the daily chart above might be to short the stock down to around the $35 mark with stops in place around $42.

However, there is also a longer-term growth story to this stock, as sales growth as well as profit-margin growth could be leading to a higher stock price over the next 12 months.  This brings us back to the weekly chart.  On the longer-term chart, the investor has the option of buying a breakout above the upper blue line or get in on the long side as early as the price crosses back above the 200-day simple moving average.  The longer-term investor could then look at $51 as an initial price target for their investment shares.

Get Serge Berger’s daily market outlook: Stocks Still Looking for Buy Signal.

Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free weekly newsletter.