Dollar General Corporation, a discount retailer, engages in the provision of various merchandise products in the United States. The company offers various consumable products, including paper and cleaning products, such as paper towels, bath tissue, paper dinnerware, trash and storage bags, laundry, and other home cleaning supplies; packaged food, comprising cereals, canned soups and vegetables, condiments, spices, sugar, and flour; perishables consisting of milk, eggs, bread, frozen meals, beer, and wine; snacks that include candies, cookies, crackers, salty snacks, and carbonated beverages. It also provides seasonal products, including decorations, toys, batteries, small electronics, greeting cards, stationery, prepaid phones and accessories, gardening supplies, hardware, automotive, and home office supplies; and home products comprising kitchen supplies, cookware, small appliances, light bulbs, storage containers, frames, candles, craft supplies and kitchen, bed, and bath soft goods. In addition, the company offers casual everyday apparel for infants, toddlers, girls, boys, women, and men, as well as socks, underwear, disposable diapers, shoes, and accessories.
To review Dollar’s stock, please take a look at the 1-year chart of DG (Dollar General Corporation) below with my added notations:
While consolidating in July and August, DG formed a solid resistance at $56 (red). That previous resistance was a 52-week high breakout when the stock broke up through it in the beginning of September and now it should act as support if the stock were to pull back down to it. In addition, the stock has been climbing a long trendline of support (blue) since February. If DG were to fall below $56, that trendline should be the next major level of support.
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The Tale of the Tape: DG has a potential $56 level of support and uptrend line to watch. A long trade could be made on a pullback down to $56. A break below that level would bring the up trending support into focus for the next long trade.
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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!
Christian Tharp, CMT
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