Time to Climb Dollar Tree After Analyst Upgrade?

Here's what the charts say.

Dollar Tree Inc. (DLTR) got an upgrade to buy Thursday from a major sell-side signal financial institution. Let's check out the charts now that a fundamental analyst has weighed in.

After a decline from October to the middle of March we have seen prices work higher. There was a rapid advance in May but volume was lacking and prices retreated. Prices are higher Thursday and trying to break out over the late May/early June peak. DLTR is above the still declining 200-day moving average line but above the rising 50-day line.

The movement of the On-Balance-Volume (OBV) line is a problem for the bulls as it has been in a decline since September until late May. There is a slight improvement in recent weeks but the bigger picture is that sellers of DLTR have been more aggressive for a longer period of time.

The Moving Average Convergence Divergence (MACD) oscillator is above the zero line and looks like it will turn up to a fresh buy signal. 

 

In the weekly bar chart of DLTR, below, we can see that prices are above the declining 40-week moving average line. The weekly OBV line shows improvement from March but it has not made a new high for the move up so I rate it a modest positive for prices.

 

The MACD oscillator has been moving up and is not too far below the zero line and a potential buy signal. 

 

 

 

In this daily Point and Figure chart of DLTR, below, we can see that prices are close to an upside breakout at $100.37 with a price target of $117 for starters. 

 

 

Bottom-line strategy: The charts and indicators of DLTR are positive but not a "table pounding" buy, in my opinion. Traders could go long on strength above $101 and then risk a close below $94. The $117 area is our first price target.

 

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