For the Price of a Dollar…..

• Posted by Greg Harmon
• on October 23rd, 2012

There has been a bit of a correction/pullback in the broad markets. I do not know if it is over yet but I am starting to see some of the names that lost favor first bottoming and ready to turn. The ‘Dollar Store’ complex is one worth noting.

Dollar General, $DG

Dollar General, $DG, has printed 4 bottoming candles in a row before Tuesday’s bullish engulfing candle. Ending last week with the long tail on October 17th followed by a similar candle the 18th and an inverted Hammer the 19th. It started this week with a Spinning Top and now bullish candle Tuesday confirms it higher. The Relative Strength Index (RSI) is also turning back higher after touching the technically oversold level and the Moving Average Convergence Divergence indicator (MACD) peaked and is improving. Look for a move over the 200 day Simple Moving Average (SMA) at 48 as final confirmation to get long.

Dollar Tree, $DLTR

Dollar Tree, $DLTR, is a similar story. Beaten up more than Dollar General, after a long candle lower they have been getting getting smaller until Fridays Doji Spinning Top followed by Monday’s Spinning Top, both confirmed higher by the long white Bullish Engulfing candle Tuesday. The RSI is technically oversold and now improving with a MACD tat is also moving back toward the zero line. Look at a move over 40 to seal the deal on a reversal.

Family Dollar Stores, $FDO

Family Dollar Stores, $FDO, may be the strongest of the three. After its long red candle on the 17th they shrunk until the Hammer like candle Monday which was confirmed higher with the Bullish Engulfing candle Tuesday. The RSI is turning back up here and never moved into bearish territory with a a MACD that is leveling. A continuation back over 66 can be used as a long trigger.

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Dragonfly Capital Views Performance Through October 2012 Expiry

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