A Four Star General or Just Another Dollar Store
- Posted by Greg Harmon
- on August 26th, 2013
Dollar General, $DG, had a great first half of 2013, rising from a bottom at 40 to 55 before doing some backing and filling. The pullback to the 200 day Simple Moving Average (SMA) just under 49 in June retraced just over 38.2% of the move higher and it has since pushed up again. The latest run higher off of the 100 day SMA has brought it back to prior resistance at 55.85. This is the third trip and today it printed a Spinning Top, indecision. The Moving Average Convergence Divergence indicator (MACD) support a move through the resistance with a signal line that has crossed up and the Relative Strength Index (RSI) held in bullish territory on the last pullback and is moving higher, also supporting further
upside. That is no guarantee that it moves higher though. Should it continue then there is a target of 59 on a break out higher. It will look just like a 4 Star General if it breaks out higher. But should it fail the area at 53 and the 100 day SMA have been good support. This would bring it back to the realization that it is a just another Dollar store. As a trader you can play either scenario as it presents now that you are prepared.
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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)
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