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We mentioned Tuesday in our CNBC Pro weekly outlook that there was a good chance that Dollar Tree could have a solid quarter and potentially sell off given price action heading into the event. In fact, its peers in Five Below and Dollar General gave us the road map. Dollar Tree shares are off by about 7% — a mere flesh wound given the recent rally and its +48% ytd performance. The weakness is where one should look for entry points. The near-term uptrend is broken, but the longer-term trend should remain intact. The fundamental turnaround story continues, so for those that may have missed the bottom of this reversal there are two areas to watch to enter this name over the near-term (a rally back after the initial dust settles from today’s reaction) and the longer-term. For those legging into the trade, look to the $102.50-$104 area for your first nibble. The gap lower at the open is what most traders are watching. We are starting to fill that gap as the session continues, a sign that maybe this is just a quick drop and the stock work its way up to the 50-day moving average. DLTR 1D mountain Dollar Tree, 1-day If things break down from here again, then I’d get more aggressive as the stock nears its 100-day moving average, which coincides with a nice pocket of support around the $98.50/$100 level. Usually we like to wait two to three days before seeing a more stable bottom as it may take days to start to climb back – but given recent momentum and fundamental story that continues to get better this is a dip worth buying as shares should likely recapture the $115 area and knock on the doors to those 52-week highs as we start to think about next quarter’s earnings 6-8 weeks from now DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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