Don’t be shopping at Dollar Tree ($DLTR) yet – August 26, 2022
DLTR
I want to look at Dollar Tree ( NASDAQ: DLTR ). Pretty soon this is going to turn into Quarter Tree or Dime Tree. The company reported earnings the other day and shall we just say, they weren’t that great.
The stock HAD been looking like it was a potential breakout. I had drawn this a few days ago, quite a few days ago, on the 17th, with my little question mark, going, is this going to move up or not? This is a really good example, a reason why, so I drew it here, why you don’t just want to look at this and say, oh, it’s going to break out, I’m going to buy it now.
It didn’t break out, not even close, It was just flirting with it, it was kind of looking like it would. And so you sit here, you watch. I had an alert set up here at 170.50, something like that, and it never got hit. And so the company reports earnings and they’re bad.
If you stretch these Bollinger Bands out to 3 standard deviations, where it is pretty much a law of markets and statistics, that if a stock move outside 3 standard deviations it is going to correct back inside, it just kind of has to. But in this case, the stock is saying, well, I don’t really have to, and so it’s not.
The point is, that this was yesterday, it got no rebound today, not at all, not even first thing in the morning, and so the stock is trading lower. Now, I am just telling you this, if you are trading this stock, if you are looking at this stock, holding it for a rebound, you may not want to be doing that.
If you look back here you can see what happened. A similar kind of thing, where the stock gapped down and then, ultimately, kept going. It fell almost 7 percent before it ultimately reversed. But it wasn’t much of a reversal until you get this move, I forget what this is, it doesn’t really matter, it was probably earnings at that time too.
But I just know this, after this kind of breakout, or breakdown I should say, this is all just pain right up here. Actually, all the way down here. Anybody who bought in this entire chart, anybody who bought is upside down, which means that when buyers come in for this stock you are going to see a lot of selling, a lot of selling.
So I would stay away from this stock. Don’t look at this as an oversold rebound that you just got to get in on. Also, you can keep an eye on this stock as maybe a potential short, not here, not even close to here. The stock is down 15 percent but IF the stock comes up here, or maybe even up to 160.00 or so, and then starts rolling over, at that point you could consider shorting it.
You never want to short a stock that is down like this because it is virtually always going to hurt you. At some point, even if it is just a small rebound, you are going to get a rebound. So just don’t do it, that’s all I am going to tell you. You definitely want to watch this stock but right now this is just a “Danger, Will Robinson” pattern. You just want to watch, you don’t want to play.
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