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Analyzing the Retail Stock Bubble

Value Level is the price at which to enter a good-'til-cancelled limit order to buy on weakness. The letters mean: W-Weekly; M-Monthly; Q-Quarterly; S-Semiannual; and A-Annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level is the price at which to enter a GTC limit order to sell on strength.

Amazon.com (AMZN) ($243.94) set an all-time high at $264.11 on Sept. 14 and is above its 200-day simple moving average (SMA) at $214.87. The weekly chart shifts to negative on a close this week below the five-week modified moving average (MMA) at $248.06 with the 200-week SMA at $156.33. A negative weekly chart is a sign of a bubble popping. Investors and traders should employ a "buy and trade" strategy between the value level and risky level.

Costco Wholesale (COST) ($97.00) set an all-time high at $104.43 on Oct. 10 in reacting to its earnings report. The stock is above its 200-day SMA at $90.57. The weekly chart shifts to negative on a close this week below the five-week MMA at $98.63 with the 200-week SMA at $69.04. A negative weekly chart is a sign of a bubble popping. Investors and traders should employ a "buy and trade" strategy between the value level and risky level.

Dollar General (DG) ($243.94) set an all-time high at $56.04 on July 7 and is above its 200-day SMA at $47.87. The weekly chart is negative with its five-week MMA at $50.82. Investors and traders should employ a "buy and trade" strategy between the value level and risky level.

Dollar Tree (DLTR) ($40.52) set an all-time high at $56.81 on June 20. This bubble has popped with the stock below its 200-day SMA at $48.19. The weekly chart stays negative on a close this week below the five-week MMA at $45.90 with the 200-week SMA at $28.34. Investors and traders should sell strength to the semiannual pivot at $43.02.

Family Dollar (FDO) ($68.524) set an all-time high at $74.73 on June 14. This bubble popped as the stock fell to a test of its 200-day SMA at $61.95, and has since has a pattern of trying to reinflate the bubble. The 200-day SMA is now $63.27. The weekly chart has been positive since the week of Sept 28 with the five-week MMA at $66.39 with the 200-week SMA at $45.42. Investors and traders should employ a "buy and trade" strategy between the value level and risky level.

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