In a sign of difficult times for consumers, deep discount retailers have moved up to the top of the Green Favored Zones in SIA Charts relative strength rankings. In Canada, Dollarama (DOL.TO) is #1 in the SIA S&P/TSX Index Report and in the US, Dollar Tree (DLTR) is #1 in the SIA NASDAQ 100 Index Report. Both companies were among the relatively few stocks in North America to post gains yesterday. Dollar Tree also moved up one position in its report to top spot continuing an upward trend in relative strength that started at the bottom of the red zone last October.
Accumulation appears to be accelerating once again in Dollar Tree (DLTR) shares. Last fall, DLTR staged a major breakout, blasting through $120.00 resistance, which had held for over two years, to signal the start of a new uptrend. Since then, $120.00 has reversed polarity to become a key support level that held even during a spring selloff. In recent weeks, the shares have started to climb once again, regaining $160.00 and snapping a downtrend line.
Initial upside resistance appears in the $175.00 to $180.00 area then the $200.00 to $205.00 zone where a round number and measured moves converge. Initial support has moved up toward $160.00.
Dollar Tree (DLTR) recently successfully held near $150.00, establishing a higher low. Since then, the shares have turned back upward, snapping a downtrend line and completing a bullish Double Top pattern to signal the start of a new upswing.
Initial resistance remains in place between $176.70 and $180.25 were horizontal counts and the previous peak converge. A break through there would confirm that DLTR’s primary uptrend has resumed. Should that occur, next potential resistance on trend may appear near the $200.00 round number. Initial support appears near $153.85 based on a 3-box reversal, follows by the recent low near $147.85.
With a perfect SMAX score of 10, DLTR is exhibiting strength across the asset classes.
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