Dollar Tree, Inc. (DLTR) was reviewed in early October, and we wrote, "DLTR has been strong over the past three months but prices have nearly reached a price target base on a measuring gap. It would be acceptable or normal to see DLTR correct some of its rally since early July. At some point DLTR is probably going to retest the November highs but I would more likely anticipate that after a period of sideways price action." Prices did in fact stall, or consolidate, until the middle of November when fresh gains got under way -- lifting DLTR to new highs.
Like every day on Wall Street, we have to answer the question "what next?" So what is next for this retailer? Let's check the latest charts for some guidance. In this daily bar chart of DLTR, we can see a substantial rally since late June/early July. Prices are above the rising 50-day moving average line and the rising 200-day line. A bullish golden cross of the 50-day and 200-day averages can be seen in late September that is not too late to capture a lot of the rally this year.
The daily On-Balance-Volume (OBV) line turned up in late June as buyers of DLTR turned more aggressive. The trend-following Moving Average Convergence Divergence (MACD) oscillator turned up last month for a fresh outright go-long signal.
In this weekly bar chart of DLTR we can see how prices broke over the 2016 highs around $100. Prices are above the long-term 40-week moving average line. The weekly OBV line has been rising since late June and confirms the price advance. The weekly MACD oscillator is very bullish and shows no sign of a take-profits sell.
In this Point and Figure chart of DLTR, below, we can see the strong rally that has been made and that prices have already met and exceeded at $95.38 price target. Prices can move higher, but a period of consolidation would be welcomed.
Bottom line: If you are long DLTR, you are in the driver's seat, so to speak. Hold longs. Traders might use a sell stop below $97 and investors could use a stop below $90, the last consolidation area. The $120 area would be my next possible price target.
