When technology giant Apple (NASDAQ: AAPL) unveils a new product, it’s not only its shares that see movement. 

#-ad_banner-#The news often has a chain reaction, causing a nice pop in the stocks of companies whose revenue and profits are likely to get a boost from the latest device. And while AAPL often offers good trading opportunities, from a risk/reward standpoint, better opportunities can often be found in these stocks.

Case in point, shares of electronics retailer Best Buy (NYSE: BBY) rallied 3.5% Friday on strong volume, following the reveal of the iPhone 6 and news that Apple had seen a record number of preorder sales.

The move broke the stock decisively past a resistance line stretching back to early July. BBY now looks poised to fill the big down gap from January, offering traders a juicy bullish setup. 

Looking at the weekly logarithmic chart, note that since the top in 2006, there have been two massive V-shaped reversals. Each provided traders the chance to make double-digit profits in a matter of weeks.

When the stock broke below its 2008 lows in late 2012, it became very volatile, which was a sign to watch for a potential bullish reversal. Eventually, the divergences between momentum and price became too great, and BBY accelerated higher and back above the 2008 lows. Thus, the breakdown was a fake-out move that shook out the last of the weak hands in the stock.

Over the next 11 months, BBY soared nearly 300%, finally running out of steam in November 2013, when the stock worked itself back up to a diagonal resistance line that stretches back to 2006. 

BBY then corrected to an important support area — the 61.8% Fibonacci retracement line of the entire rally off the early 2013 lows. The fact that this support held makes me believe this was more of a mean-reversion/consolidation move and that BBY should be able to take out its late 2013 highs in the next six months or so.

On the daily chart below, we see the big sell-off in January left a hole on the chart, a so-called unfilled gap. 

A gap occurs when a stock moves substantially outside of normal trading hours so that the opening print is significantly higher or lower than the previous day’s close. It is typically the result of some major news or important event.

It is commonly believed that all gaps get filled, i.e., price movement fully retraces the gap. While many gaps do get closed, this is not always the case. And the time frame for a gap to be filled may be longer than investors anticipate.

In the case of BBY, the down gap from January, which was the result of weak holiday sales, is now, some eight months later, looking like it could fully close in the coming weeks or months.

On Aug. 26, Best Buy missed quarterly revenue expectations and the stock dropped almost 7% on the day. The selling was short-lived, however, and the stock rallied the next day, signifying traders were ready to buy the dip.

Over the past couple of weeks, BBY consolidated below resistance around $32, which dates back to early July, until it finally gave way on Friday. The next logical upside target is the top of the down gap from January near $37.50.
 
Recommended Trade Setup:

— Buy BBY at $33.30 or higher
— Set stop-loss at $32.30
— Set initial price target at $37.50 for a potential 10%-13% gain in 4-8 weeks

In just six months, the Alpha Score has tagged 71 stocks right before they jumped 10% in two weeks. And it’s tagged 21 stocks right before they jumped 20%. To see how it does it — and to get the name of a stock flashing “buy” right now — click here.

This article was originally published by ProfitableTrading under the title: Charts Say This Alternative iPhone Play is an Immediate ‘Buy’.