Big Lots (BIG) : "I haven't liked them for a long time and I've been right." That's what Jim Cramer told one caller during Wednesday's Lightning Round segment of Mad Money. Let's check out the charts.
In this daily bar chart of BIG, below, we can see that prices topped out in March through May and turned lower from June. BIG is trading below the declining 50-day moving average line and below the cresting 200-day line. We can see a bearish dead or death cross of these two moving averages at the beginning of September.
The On-Balance-Volume (OBV) line shows weakness from May as traders were more aggressive sellers. The Moving Average Convergence Divergence (MACD) oscillator turned bearish in May.
In this weekly Japanese candlestick chart of BIG, below, we can see that prices are trading below the cresting 40-week moving average line. Prices are testing key support in the $45-$43 area and a break of this zone is likely to precipitate further declines.
The weekly OBV line shows weakness the past 12 months or so. The MACD oscillator is bearish.
In this daily Point and Figure chart of BIG, below, we can see that prices reached a downside price target in the $51 area but have continued lower.
In this weekly Point and Figure chart of BIG, below, we can see a downside price target of $43.
Bottom line strategy: BIG has made a significant correction but that does not make it a buy. Further declines look likely. Avoid the long side of BIG.
