Big Lots, Inc. (NYSE: BIG)

Big Lots, Inc., through its subsidiaries, operates as a broadline closeout retailer in the United States and Canada. The company offers products under various merchandising categories, such as consumables, including food, health and beauty, plastics, paper, chemical, and pet departments; furniture category comprising upholstery, mattresses, ready-to-assemble, and case goods departments; home category that consists of domestics, stationery, and home decorative departments; and seasonal category, which includes the lawn and garden, Christmas, summer, and other holiday departments. It also provides merchandise under the play n’ wear category that comprise electronics, toys, jewelry, infant accessories, and apparel departments; and hardlines and other category, including appliances, tools, paint, and home maintenance departments. As of January 28, 2012, it operated 1,451 BIG LOTS stores in the 48 contiguous United States, and 82 LIQUIDATION WORLD and LW stores in Canada. The company also offers its products on wholesale basis. Big Lots, Inc. was founded in 1967 and is based in Columbus, Ohio.

Please take a look at the 1-year chart of BIG (Big Lots, Inc.) below with my added notations:

1-year chart of BIG (Big Lots, Inc.)

BIG had been hitting a very important level of resistance at $32 (lt. blue) and had been stalling at that price since August. No matter what the market has or has not done over that period of time, BIG has not been able to break through that area of resistance, until last week. The stock should be moving higher overall and now, as expected, the stock seems to be finding support at the previous $32 resistance.

The Tale of the Tape: BIG broke through its key level of resistance at $32 and could be entered as a long trade on any pullbacks to that level. However, if the stock were to break back below $32, the forecast for a move higher would be negated.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT