Dollar General Corp. (DG) has been charging ahead of the troops the past few years, doubling in price from early 2017 -- despite the recent trade war with China. Monday morning, Jim Cramer noted that Dollar General like its cousin, DollarTree (DLTR) , has "far less China exposure than one would believe...."
Let's check out the charts and indicators of this retailer to see if the rally can continue.
In this daily bar chart of DG, below, we can see a test of the rising 200-day line in late December, before a $45 rally got underway. Dips in March and May toward the average line turned out to be buying opportunities.
The daily On-Balance-Volume (OBV) line shows a rise from December to July to confirm the price gains but the OBV line shows some weakness from the middle of July. The Moving Average Convergence Divergence (MACD) oscillator has been weakening from late June and is now below the zero line in sell territory.
In this weekly bar chart of DG, below, we can see the bigger picture with prices doubling. DG is above the rising 40-week moving average line but the weekly OBV line has not risen much from early 2018. The weekly MACD oscillator is crossing to the downside from above the zero-line for a take-profits sell signal on this longer time frame.
In this Point and Figure chart of DG, below, we can see a potential downside price target of $117.
Bottom line strategy: DG is still in an uptrend, but the Point and Figure chart shows some risk. A close below the recent low around $131 would be my signal to book profits.
