$1 Ideas for Dollar General
- Posted by Greg Harmon
- on March 21st, 2012
Dollar General, $DG, reports earnings Thursday morning before the open. The rest of the world will be paying attention to the news out of Fedex, $FDX and lululemon athletica, $LULU, so this will likely get swept under the rug. But this stock is worth taking a look at whether you are a day trader, swing trader, or position trader of stocks or options. Here is why.
Dollar General, $DG
The chart above shows that long move higher off of the low in August. After consolidating throughout February it moved higher in early March and has been consolidating again the last 5 days into the earnings report. This bull flag has a target on a Measured Move higher to 48.50. A good reaction to earnings in a market that is biased higher could help it get there in a couple of weeks or less. Perfect for a swing trader, or an options trader who wants to spend $1 on a April 45/48 Call Spread. But this stock also has historically reacted with big moves following the earnings report. Over the last 6 reports it has moved an average of 4.4% or $2.00 at today’s closing price. That is quite a move for a stock with historical volatility of less than 20%. Perfect for a day trader, at least for Thursday. And what happens if the reaction is negative, and it moves down $2 to 42.75. The short term double top with long upper shadows touching 45.75 suggests it could. This is where that full month of consolidation took place. Looks like a good opportunity to take a shot at it long against the base. The Relative Strength Index (RSI) has been in bullish territory since August with upward sloping Simple Moving Averages (SMA) and a positive Moving Average Convergence Divergence (MACD) indicator. It may pullback but will take a monster move lower to change that momentum. Using a $1 trailing stop keeps your risk down to $1 on Dollar General.
If you like what you see above sign up for deeper analysis and trading strategy by using the Get Premium button above. As always you can see details of individual charts and more on my StockTwits page.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
- Weekend Macro Roundup
- Top Trade Ideas for the Week of September 2, 2014: Bonus Idea
- Top Trade Ideas for the Week of September 2, 2014: The Rest
- Top Trade Ideas for the Week of September 2, 2014: The Rest Premium
- Top Trade Ideas for the Week of September 2, 2014: The Best
- Should Trading and Investing Really Not be Fun?
- SPY Trends and Influencers: Monthly Edition August into September 2014
- SPY Trends and Influencers August 30, 2014
- Macro Month in Review/Preview August into September 2014
- Macro Week in Review/Preview August 29, 2014