Rite Aid (RAD) is selling off this morning in reaction to its latest earnings report. RAD has had ups and downs but its overall pattern is positive and this suggests we should be buying the dip.
The longer-term picture of RAD, above, shows a breakout in early 2013 with a sharp rally from $1 to north of $8 before a downward reaction developed. The rally resumed, taking RAD to new highs for the move up.
For much of this year, RAD has been in a $7.50 to roughly $9.00 range (see the chart above). Prices are weaker this morning, but this pullback is just within the recent trading range and does not suggest that a downtrend is beginning. The On-Balance-Volume line has been creeping higher suggesting that investors have been accumulating shares. Bottom line? Buy this dip and add to longs on a move over $9.50.