Disclosure: I hold no positions in CVS Health, Dollar General, Dollar Tree or Walgreens.
All you hear from Wall Street and in the financial media is how strong the U.S. economy is. If that were the case, why are the stocks representing the stores you see in suburban and rural towns under downside pressure ? If the consumer represents 70% of the economy these stocks should be zooming, but they are not!
Perhaps consumers are saddled with so much debt that the tax cuts are not leading to spending increases. Household debt is now at a record $13.15 trillion with the credit card component rising above $1.00 trillion for the first time ever.
Federal Reserve policy is hurting homeowners and small businesses on Main Street and in rural America as consumer rates rise but savings rates do not. This squeeze is not likely to end and despite a modest increase in household income, costs are increasing at a higher rate.
Here’s a scorecard for 4 Main Street and Rural Stocks
CVS Health (CVS)
The weekly chart for CVS is negative with the stock below its five-week modified moving average of $71.49. The stock is well below its 200-week simple moving average at $88.42 and has been below this ‘reversion to the mean’ since the week of Nov. 11, 2016 when the average was $83.40. The 12x3x3 weekly slow stochastic reading is projected to end the week at 24.33, down from 33.08 on March 2.
Given these charts and analysis, buy CVS now with the stock influenced by my monthly and quarterly pivots of $68.51 and $69.49, respectively, and reduce holdings on strength to the 200-week simple moving average at $88.42.
Dollar General (DG)
The weekly chart for Dollar General is negative with the stock below its five-week modified moving average of $94.57. The stock is well above its 200-week simple moving average at $74.97, which is the reversion to the mean, last tested during the week of Sept. 1, 2017 when the average was $70.75. The 12x3x3 weekly slow stochastic reading is projected to end the week at 50.52, down from 63.36 on March 2.
Given these charts and analysis, buy Dollar General on weakness to the 200-day simple moving which is rising each day and now at $83.34. My quarterly pivot is $90.92. Investors should reduce holdings on strength to my semiannual, monthly and annual risky levels of $96.09, $101.91 and $106.21, respectively.
Dollar Tree (DLTR)
The weekly chart for Dollar Tree is negative with the stock below its five-week modified moving average of $104.32. The stock is above its 200-week simple moving average at $77.94, which is the reversion to the mean, last tested during the week of July 28, 2017 when the average was $71.34. The 12x3x3 weekly slow stochastic reading is projected to end the week at 46.70, down from 58.05 on March 2.
Given these charts and analysis, buy Dollar Tree on weakness to the 200-day simple moving, which is rising each day and now at $90.09, which was violated at Wednesday’s low. My quarterly pivot is $96.70. Investors should reduce holdings on strength to my semiannual and annual risky levels of $107.36 and $118.56, respectively.
Walgreens Boots Alliance (WBA)
The weekly chart for Walgreens is negative with the stock below its five-week modified moving average of $71.37, and below its 200-week simple moving average at $79.04 and has been below this reversion to the mean since testing this average during the week of Feb. 2 when the average was $78.97. The 12x3x3 weekly slow stochastic reading is projected to end the week at 35.47, down from 40.72 on March 2.
Given these charts and analysis, buy Walgreens now with the stock influenced by my monthly and quarterly pivots of $69.26 and $73.67, respectively, and reduce holdings on strength to the 200-week simple moving average at $79.04. My annual risky level is $86.80.
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