When we looked at the charts and indicators of Dollar General (DG) at the beginning of February we came away with a bearish bias and concluded from the Point and Figure chart that, "A decline to $69 should break the decline and could open up the way for a deeper selloff to $43."
DG has been on the defensive since early February, as the bounce in February failed below the November peak. But a break of $69 has not (yet) happened, so let's check the charts again. Maybe something has changed.
In this daily bar chart of DG, above, going back 12 months, we can see the roller-coaster ride that has become all-to-common on the charts of some retailers. Today we can see that DG is back down around the January lows and trading below the declining 50-day and 200-day moving averages.
The On-Balance-Volume (OBV) has been amazingly flat since early December and not giving us much in the way of showing a bias. The trend-following Moving Average Convergence Divergence (MACD) oscillator is in a bearish mode below the zero line.
In this weekly chart of DG, above, we can see that prices are below the declining 40-week moving average line. Even though the daily OBV line is neutral, the weekly OBV line has been weak since July and tells us that on this timeframe sellers of DG have been more aggressive. In the lower panel is the MACD oscillator, which is below the zero line and poised to possibly cross to a fresh sell signal.
This updated Point and Figure chart, above, shows that DG has not made a new low for the move down, or that it hasn't printed $69.
Bottom line/strategy: I am torn between the neutral daily OBV line and the bearish weekly OBV line. But with the bearish moving averages, I have to side with the bears. I would refrain from the long side of DG as a breakdown of the $69-$68 area should precipitate further losses.