In our previous report on May 30, 2009 ($30.46), we suggested that Family Dollar Stores was about to complete a bullish "W" pattern (dashed lines - pattern begins in 2004) and that a rise above $35-$36 (the neckline of the formation - dotted line) would confirm this. Following our report, the stock pulled back toward $26 (A) and then started a sharp rise that pierced easily above the neckline to reach a high of $42.07 (B). The subsequent correction found support at the neckline (C). Only a decline below the 40wMA (currently at about $34) would reverse the current long-term upside potential.
Point & Figure measurements provide targets of $49 and $54. The large "W" formation (dashed lines) supports significantly higher targets.
Ron Meisels is a contributor to the www.NA-marketletter.com website. Monica Rizk is the senior Technical Analyst for Phases & Cycles Inc. They may hold shares in companies profiled. Please see the site for a glossary. Source: www.decisionplus.ca