Five Below, Inc. operates as a specialty value retailer in the United States. The company offers various products priced at $5 and below. It offers accessories, such as novelty socks, sunglasses, jewelry, scarves, gloves, hair accessories and attitude’ T-shirts, as well as beauty products, including nail polish, lip gloss, fragrance, and branded cosmetics; and items used to complete and personalize living space comprising glitter lamps, posters, frames, fleece blankets, pillows, candles, incense and related items, and storage options for the customer’s room and locker. It also provides sport balls; team sports merchandise and fitness accessories, including hand weights, jump ropes, and gym balls; games comprising name brand board games, puzzles, toys, and plush items; and pool, beach and outdoor toys, games, and accessories.
Please take a look at the 1-year chart of FIVE (Five Below, Inc.) below with my added notations:
FIVE has held a very important level of support at $35 (blue) for over a year now. No matter what the market has done over during that time, FIVE has not broken $35. Now, the stock is approaching $35 again and that might provide another bounce higher. However, the stock’s formation of a complex head and shoulders pattern could be setting the stock up for a breakdown.
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The Tale of the Tape: FIVE has a key level of support at $35. A trader could enter a long position at $35 with a stop placed under the level. If the stock were to break below the support, a short position would be recommended instead.
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Stock Trading & Investing for Everyone
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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