Keystone Automotive Industries, Inc. is the nation’s distributor of aftermarket collision replacement parts produced by independent manufacturers for automobiles and light trucks. Keystone distributes products primarily to collision repair shops throughout most of the United States and certain areas in Canada. In addition, the Company recycles and produces chrome plated and plastic bumpers and remanufactures alloy and steel wheels. The Company’s principal product lines consist of automotive body parts, bumpers and remanufactured alloy wheels, as well as paint and other materials used in repairing a damaged vehicle. Keystone currently offers more than 19,000 stock keeping units to over 25,000 collision repair shop customers, out of an estimated 51,000 shops nationwide. (Source: Bigcharts)

Now might be a good time to start thinking about a potential investment in Keystone Automotive Industries (KEYS:NASDAQ) and let me tell you why. The stock currently trades at $36.05, down from a one year high of about $47/share.

So, if the stock has pulled back why am I bullish?

Well, the stock recently bottomed and bounced hard off support at $30 and $32 (both horizontal support lines can be seen on the graph shown). The successful testing of a previous breakout point helps in justifying the long-term upward trend.

The DMI indicator is screaming to buy, but the MACD is not quite there yet, which is why this play is on our watch list. In another week or two I would expect this indicator to give into the momentum and begin to plot a new uptrend.