Dollar Tree (DLTR) has been pretty volatile in recent months, rallying from $73 to $100 and back down again. This past month DLTR rallied about $18-$19 in about three weeks.
Is your head spinning? Gap up, gap down and gap up again. Let's check the charts and indicators to see if we can make sense of any of this.
In this one-year daily chart of DLTR, above, we see the 90-degree turns that are way too difficult to trade, in my opinion. Concentrating on just the most recent price action we can suggest a strategy for the near term. The price action in the past seven trading sessions could be an island reversal but it would need a gap lower to complete the picture.
The volume of trading in DLTR in November was not much different from other months like August, for example, but notice the rapid rise in the On-Balance-Volume (OBV) line to a new 12-month high. This strong movement in the OBV line suggests some very aggressive buying and would give greater weight to the idea of prices moving still higher rather than reversing to the downside.
The Moving Average Convergence Divergence (MACD) signaled a go long move in mid-November but the two lines of this indicator are beginning to narrow. This might result in a take profits sell signal but there is no guarantee.
This long-term weekly chart of DLTR, above, is mixed. Prices are above the slightly rising 40-week moving average. The weekly OBV line is weak but the MACD oscillator just signaled a cover shorts buy.
What to do now? Above $92 and we should respect the bull case while a close below $82 should mean the bear has gotten the upper hand.