Stock Of The Day: Is Dollar Tree Set To Move Higher? (Updated)

Dollar Tree Inc. DLTR shares are moving higher on Thursday. It looks like a new uptrend may be forming.

The shares were oversold at support and competitor Dollar General Corp DG reported earnings. These are the reasons why Dollar Tree is our Stock of the Day.

Because of their similarities, analysts will be studying the Dollar General numbers to gain insight into Dollar Tree's upcoming earnings. They are due to be released on March 25.

You can see on the chart that Dollar Tree found support and rallied off of the $62 level. This price was also support in November.

Stocks tend to find support at prices that had previously been support due to investor and trader psychology. It is because remorseful sellers trying to buy their shares back.

Some of the people who sold their shares around $62 in November came to believe their decision to sell was a mistake after the price moved higher. Some vowed to buy their shares back, but decided only to do so if they could get them for the same price the shares were sold.

Read Also: US Producer Inflation Stalls In February As Services Costs Drop, Egg Prices Skyrocket

So yesterday, when the shares dropped to around $62, they placed buy orders. The large amount of these orders made support form at the level again.

Some of these investors and traders became concerned that others would be willing to pay more. So they decided to increase bid prices above $62. Others concerned they would miss out saw this and raised their bid prices as well.

It resulted in a bidding war that forced the stock into an uptrend.

Other buyers were drawn into the market due to the oversold conditions. They anticipated a reversal and move higher. The red line on the chart is called a moving average envelope. It is 7% below the 20-day moving average.

As you can see on the chart when the stock dropped below this threshold recently it was a good time to buy. It rallied back to the average.

If it does so once again, it would mean that Dollar Tree will keep moving higher.

Read Next:
• Trump Threatens 200% Tariff On European Wine, Alcohol Stocks React

Photo: Shutterstock