Dollar Tree (DLTR) is the 'Stock of the Day' at Real Money. The discount retailer just reported its Q4 numbers which missed consensus forecasts. The stock is indicated lower. Let's check out the charts and the indicators.
In this daily bar chart of DLTR, below, we can see that prices have suffered since the middle of October and have broken the lows of August. DLTR is below the declining 50-day moving average line as well as the now bearish 200-day moving average line. A bearish "dead cross" of these two averages can be seen in December.
The daily On-Balance-Volume (OBV) has been trending lower since September and tells us that sellers of DLTR have been more aggressive with heavier volume being traded on days when the stock has closed lower.
The Moving Average Convergence Divergence (MACD) oscillator shows a cover shorts buy signal in December but just turned lower at the underside of the zero line for a new sell signal.
In this weekly bar chart of DLTR, below, we can see that prices have held the $80 level several times in 2018. $80 is key support because prices bounced off that level many times. Weakness below $80 will put a large audience under water and turn the support area into a resistance area.
The 40-week moving average line is in a downtrend well above the price action.
The weekly OBV line peaked in October and has been "rolling over" since then.
The MACD oscillator is in a bearish configuration below the zero line.
In this daily Point and Figure chart of DLTR, below, we can see the large top pattern and a potential downside price target in the $69 area.
Bottom line strategy: The charts of DLTR turned bearish long before the coronavirus became an "issue". DLTR has a potential downside target of $69 but the key to watch is a weekly close below the key support around $80. Avoid the long side for now.
