For the Long Haul, Fred Likes Big Butts

Retailer Freds (ticker: $FRED) reported earnings this morning and either beat expectations or fell short. I don’t really care. Actually they reported and guided in line. Boring! But knowing that it was about to report was only a reason not to have traded it yet. But now that it has reported it is fair game. When I look at the chart of the stock on a daily basis there is a nice consolidation occurring at resistance of the falling trend line from January.

The touches to that trend are becoming more frequent and the pullbacks shallower with the 50 and 100 day Simple Moving Averages (SMA) as support. Analysis of this chart would focus on 3 points. A break above the trend line would trigger a buy looking for a a move to the range of 15.75 – 16. A failure there would trigger a short looking for support back at the SMA’s or the uptrending support line below. The second point is the 2 SMA’s. Holding above them triggers a buy signal with resistance at the falling trend line and falling below it triggers a sell signal with support at that rising trend line. The third point is the rising support trend line. A hold above trigger a buy and fall below a sell with support at 12.25-12.30 followed by 11.75. That is what the day traders care about. But back it up a bit and look at the weekly chart below. That is a 7 year rounded bottom.

Now that is a big butt! This is a stock for those with a longer term timeframe. The basing shows a top around 15 that it needs to break but from a weekly timeframe it looks very appealing for a long position. A move over 15 looks to head higher eventually to 22.50 or more. Wow, baby got back.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

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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.

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