Schaeffer's Trading Floor Blog

Into the Close

by 4/8/2005 4:12 PM
Stocks quoted in this article:

It was a relatively disappointing showing by the bulls...


Chart Courtesy of Thomson/ILX

...as the SPX slowly bled off the gains from the past two days and closed inline with where it finished on Tuesday...



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Stocks quoted in this article:

Dave says - "What do you think of the deep discount retail group? NDN, FDO, DLTR, and DG. Their scorecards are decent, except for FDO. Barron's ran a bullish piece on FDO several months ago. The decline of Wal-Mart raises some interesting problems for the Deeps, who lack any of Wal-Mart's buying clout, inventory control, or shipping advantage. Wal-Mart could become a giant Deep with little or no effort. Anyway the conventional wisdom is that the Deeps are defensive plays, even though the chains can ship their own product, close underperforming stores, and manage their books a little better. The Deeps stocks tend to get a lot of hype, and their growth always depends on expansion plans in which the expectations are usually a bit too high. Any thoughts?"

My response - I won't pretend I have any special insight into how WMT will ultimately impact this area so I turn to what I do know...charts and sentiment. Here is what I see on 99 Cents Only Stores (NDN), Family Dollar Stores Inc (FDO), Dollar Tree Stores Inc (DLTR), and Family Dollar Stores Inc (FDO).

I just pulled the scorecards and found that: NDN = 6, FDO = 2, DLTR = 5.5, and DG = 7. As Dave noted, FDO shows a relatively poor reading and only DG has a scorecard that is high enough to get my attention. Turning to the charts...

Created with SuperCharts by Omega Research

When looking at stocks I haven't looked at in a while, I always start off with the weekly charts to get a feel for the intermediate-term trend. Based on this, DG is showing some signs of life while the rest strike me as something closer to abysmal.

As whole, the low scorecard and weak chart of FDO looks like a warning while the somewhat high scorecard and relative uptrend on DG seems encouraging. The other two seemed too mixed to get a good read on.

I don't know if that helps, but that is what I see...


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Stocks quoted in this article:

Tim says - "FYI - SBUX has broken south of a "flag" set-up and is now testing support at around 50."

My response - Good catch! I last looked at Starbucks last month as the stock was testing resistance from its 20-week moving average which was aligned with the peak calls at 55. Here is an updated version of that chart...


Created with SuperCharts by Omega Research

The 10-week (black line) average has now completed a bearish cross below the 20-week (green line) moving average.

As Tim notes, the shares are testing chart support near 50 which is also the site of the peak April puts. The scorecard reading has now dropped to 5 so I would be wary of a break below support...

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Stocks quoted in this article:

I am still intrigued by the weakness in IBM...earlier this week I noted the chart...


Created with SuperCharts by Omega Research

...which isn't getting any "better"...I ended the post above by saying - "Maybe its just me, but this is starting to resemble a downtrend..." and the chart has yet to prove me wrong...


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Still Sliding

by 4/8/2005 2:24 PM
Stocks quoted in this article:

The bulls continue to struggle to hold the ground they earned this week...


Chart Courtesy of Thomson/ILX

Another bout of selling has pushed the major indices to new session lows. The SPX is now creeping in on short-term support near 1184 which as I said earlier was Wednesday's closing level and yesterday's low...

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