Dollar General Corp. ( DG) is trading higher today after their earnings beat. We last looked at DG in the middle of August where we said, "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." DG never closed below $131 and now we have gapped up to new highs.
In this daily bar chart of DG, below, we can see a large upside price gap taking DG to new highs. Prices are up five-fold from 2010. DG looks extended above the rising 200-day moving average line which has not been tested since the middle of March.
The On-Balance-Volume (OBV) line has moved upwards with prices since December and we would want to see it confirm the new price high with its own new high.
The Moving Average Convergence Divergence (MACD) oscillator has recently moved above the zero line for an outright buy signal.
In this weekly bar chart of DG, below, we can see that prices have doubled in the past three years.
DG is above the rising 40-week moving average line and the OBV line should make a new high this week when it is plotted.
The MACD oscillator crossed to a take profits signal in July but this price strength could turn the indicator positive again.
In this Point and Figure chart of DG, below, we do not have a price gap but we do have a possible price target of around $199.
Bottom line strategy: DG could be heading up towards $200 but it needs to trade sideways a bit to digest the recent gains. After maybe a week of sideways action new longs could enter risking below $145.
