As winter wanes take a look at Five Below

• Posted by Greg Harmon
• on February 22nd, 2016

Five Below ($FIVE) emerged to fill the gap between dollar store and those offering products for more than $5. Or so it would seem. With a range of 41 to $5 on any item, it is a step up from the dollar stores, although they look pretty similar inside.

With all the hype of an economic slowdown (I am not in that camp for the record), you would think that the stock would be doing very well. In fact the stock has been in a funk, moving sideways to down through the back half of 2015. With the turn of the calendar to 2016 though it is showing signs of life and now the stock looks like a good buy.

The chart above show many technical factors aligning, creating this environment. First is the Inverse Head and Shoulder pattern. This triggered with a push through the neckline to end last week. This pattern gives a price objective to at least 44.80. Next the last step higher that created the right shoulder was a run of about $6. This gives a Measured move higher to about 42.80 on a break of the current consolidation.

The Bollinger Bands® have turned up, allowing price to rise. And the momentum indicators are bullish, with the MACD crossed and rising and the RSI near 70. Finally the SMA’s are starting to turn higher as well. The 20 and 50 day are rising and the 100 day looks to join then soon. So even if you do not shop at Five Below, it seem time to consider buying the stock.

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