In his first "Executive Decision" segment of his Mad Money program Wednesday night, Jim Cramer sat down with Gary Philbin, president and CEO of Dollar Tree Inc. (DLTR) , which just reported in-line revenue and earnings. Shares of DLTR are up 11% for the year and posted a new high close for the move up Wednesday. Philbin explained that the renovations at their Family Dollar locations continue, and they plan on renovating 1,000 locations this year while also injecting some Family Dollar "wow" and some Dollar Tree surprises to keep customers coming back. It's all about the thrill of the hunt, he added.
When asked about China and tariffs, Philbin said they continue to manage whatever the situation is at the time. He said some of the costs many affect the bottom line, but overall, they remain committed to growth. They are investing in their existing stores, building new ones and strengthening their balance sheet by paying down debt. Cramer remained a fan of DLTR. Now let's check out the charts and indicators.
In the daily bar chart of DLTR, below, we can see that prices are at the top end of their trading range for the past 12 months. Buyers of DLTR have been acquiring or accumulating shares in the $82-$78 area from June to December. Prices began to rally in a more sustained way in late December lifting away from the rising 50-day moving average line and closing above the bottoming 200-day line. In late January the 50-day moving average line crossed above the 200-day line for what is commonly called a (bullish) golden cross.
The daily On-Balance-Volume (OBV) line has been rising from October and just made a new high for the move up and the past 12 months. This new high for the OBV line tells us that buyers have been more aggressive and it helps to confirm the price strength to date.
The Moving Average Convergence Divergence (MACD) oscillator gave an outright go long signal at the end of December and turned down in the back half of January for a take profits sell signal. This indicator has narrowed recently towards a fresh outright buy signal.
In the weekly bar chart of DLTR, below, we get a different perspective on the price action. Instead of seeing a sideways trading range over the past 12 months, this three-year weekly chart shows the price action from November 2017 as a possible saucer bottom formation. Prices have based in the $80 area and the $100 level looks like a "neckline" of sorts. DLTR is above the slightly rising 40-week moving average line.
The weekly OBV line has been rising from June 2017 and suggests that buyers have been more aggressive for a long time. If the OBV is leading the price action we should see the price of DLTR much higher in the weeks ahead. The weekly MACD oscillator crossed above the zero line in January for an outright go long signal on this longer time frame.
In this Point and Figure chart of DLTR, below, we can see a modest upside price target of $110.83 being projected.
Bottom-line strategy: Traders and investors could approach DLTR from the long side from around $100. Risk a close below $92 and target $111 area in the weeks ahead.