Tuesday, December 12, 2006
Up 10%, DG in one month
Up 10%, DG in one month
Taking a look back just about a month ago I had an article about the US minimum wage and its effect on the discount outlets which cater to lower income America. In that article I discussed Dollar General and its chart at the time which was ready for a lift.
After just about 30 days in the trade, it rose to close at $15.32 on Friday for a gain of 10.13% since recommendation of purchase. The stock came through the 200 day moving average which was crucial for future gains, possibly to $20 per share. It topped out at a share price of $16.97 before what is known as traders remorse (the movement of a stock going through a key line, then falling back to the line) where it fell back to the 200 day moving average.
If at any time the stock moves below the 200 day moving average, I would recommend a sell. The stock will return to the 100 day moving average before settling in that area. If you are active in the trade I would recommend setting your stop loss just $.10-.20 below the current 200 day moving average. This allows for margin of error but protects from large movements between the two key moving averages.