Today, I'm going to be analyzing Dollar Tree, Inc.(NASDAQ:DLTR). Dollar Tree has had enjoyed a spectacular rise over the last 5 years. After trading below $7 in January of 2008, this stock stayed in a pretty convincing uptrend and made an all-time high of $60.19 on October 21, 2013.
This in-depth analysis of Dollar Tree is not to say the stock can’t go higher, perhaps later in the year, but rather noting certain technical elements that are falling in place that do not look good for this stock. You only have to look back at stocks like Netflix and Apple to see how they can have spectacular falls from all-time highs and still come back.
Not shown on today's chart are 2 negative engulfing lines that occurred in the past 9 weeks on the weekly chart. That is another bad technical sign for this market.
What Does This Company Do?
Dollar Tree, Inc.(NASDAQ:DLTR) operates discount variety stores in the United States and Canada. Its stores offer merchandise at the fixed price of $1.00. The company's stores provide consumable merchandise, which includes candy and food, health and beauty care products, and household consumables.
Long Term Monthly Trade Triangles (Black Numbers)
1. Buy @ $15.76 on 8/25/09
2. Sell & Reverse @ 25.04 on 2/2/11. Gain of 9.28. Duration of trade around 17 months.
3. Buy & Reverse @ 28.50 on 4/1/11. Loss of 3.46. Duration of trade around 2 months.
4. Sell & Reverse @ 46.35 on 8/16/12. Gain of 17.85. Duration of trade around 16 months.
5. Buy & Reverse @ 42.66 on 2/27/13. Gain of 3.69. Duration of trade around 6 months.
6. Sell & Reverse @ 54.67 on 1/14/14. Gain of 12.01. Duration of trade around 11 months.
Technical Picture (Orange Numbers)
1. Long term support trend line.
2. Bearish divergence.
3. Trade Triangles all RED.
4. RSI below 50.
Since August 25, 2009, the Trade Triangles (monthly only) have made 5 trades in Dollar Tree. There have been 4 winners and 1 small loss, for an 80% success rate. Totals gains on 4 trades comes to $42.83. Total loss on 1 trade was $3.46. Net gain on all trades averaged $39.37. The results shown are for educational purposes only to illustrate a possible strategy using the Trade Triangle technology.
To summarize, I expect the current downtrend in Dollar Tree to continue, unless I see otherwise with our Trade Triangle technology.
If I'm correct in my analysis, I could potentially see Dollar Tree move down to the long term support line around the $45.00 area. This area closely meshes with a 61.8% Fibonacci retracement at $46.46 (not shown on chart).
Every success with MarketClub in 2014,
Adam Hewison
President, INO.com
Co-Creator, MarketClub
I find these analyses(guess that is plural of analysis 🙂 ) good training for how to use/read charts. Thanks, appreciate the time you take to share