Dollar Tree has a possible earnings play.

DLTR dropped today after earnings. And it hit the weekly as well as daily support trendlines.

Volume is already Extremely High.

Will it lead to a reversal/recovery from the trend lines? At least enough to make a short-put-vertical position profitable?

dltr 1 2019-11-26_10-19-08.jpg 
How did my anticipated $DLTR Bounce trade play out? It worked out just as I expected. Bounce setup is a powerful setup to buy stocks based on an exhaustion drop.

1) I hinted at a possible earnings play using Bounce long trade setup in $DLTR. That post was twenty days ago on 26th Nov. 

2) I made the analysis looking at the sharp drop in price and the nearby daily Memory support trendline. For Bounce setup to be confirmed, the stock needed to go up and close above the previous day, while bouncing up from a support trendline or pivot (Watermark) line. That Bounce setup was not confirmed on 26th Nov or 27th Nov as the price did not close higher than the previous day. 

3) There was also a weekly Memory trendline, and that held price very nicely and further strengthened the Bounce long trade setup that followed.

4) On 5th Dec, DLTR closed higher than the previous day, and it also bounced up from a deep Watermark pivot support after a sharp drop. That confirmed the bounce trade. You could probably use a short-put-vertical or long stock position to take the bounce long setup.

The long position has already given a significant profit (using options) or covered more than risk (using stock). You might book at least a partial profit.


Disclaimer: This site is for educational purposes only, explaining the use of CUE systems and techniques. It is not for trade advice. Trading involves risk. You and only you are solely responsible for the outcome of your trades.

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