Dollar Stores Defy the Doldrums

The broader market may be starting the new year with a bit of a hangover, but the discount-variety space is feeling fine and several stocks in the space look poised to move higher.

Family Dollar Stores (FDO) moved below key support in the $67 area early last month and continued lower, taking out its 200-day moving average. It held near $63, which is about a 50% retracement of the high and low of 2013. The subsequent bounce formed a small cup-and-handle pattern. The rim line and the 200-day average are being tested in today's session. Moving average convergence/divergence has made a bullish crossover and the Relative Strength Index is crossing above its centerline. Volume is light but the Money Flow Index, a relative strength measure of money flow, is testing its centerline. The stock is an aggressive buy after a close above pattern resistance or a more conservative entry would be after a move above the key support-turned-resistance zone....224 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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