I have to do a little research on the company with the ticker FIVE. It was blowing up in the social media world. So, I thought, quick to write an article for all the adoring fans!
Here’s my take on FIVE. Five Below Inc. is the leading retailer of trend-right, extreme-value merchandise to the teen and pre-teen market – all for $1.00 – $5.00. So in short, I’ll never shop there. (Pre-teens, is there a scarier word?)
My assumption is with the right marketing and leader ship this could become a great brand, similar to Dollar General (DG) and Family Dollar (FDO), which are both pretty decent stock performers. (Even though I think DG is forming a head and shoulders pattern but that’s an entirely different write up, huh?)
On Thursday, FIVE had its earnings announcement. The stock gapped up with tremendous volume and then, the selling began. It formed a nice, large black candle. FIVE appears to have closed above some strong resistance levels and breaking out of an accumulation phase around $36. The $36 area turned into what appears to be a nice size symmetrical triangle.
The fact that FIVE open above both the 100 and 200 moving averages shows signs of strength. If the gap remains open, my outlook for FIVE would be more bullish, than bearish. The stock is pretty new with an initial public offering in the not so distant past. Therefore, we don’t have tons of information to go off of but, if FIVE holds this level, it will finally be above the 10, 20 and 50 exponential moving averages on both the daily and the weekly.
This would be a longer term trade. The current risk profile would be a 1:2 risk: reward at a target of $50.00. $50 actually represents a strong resistance as well. Best case scenario, FIVE trades sideways (staying above the long terms) for the next 2-8 days. The EMA’S catch up to the price action at tad and then the stock pops. That way, the risk: reward could become a little better. Also, put sales and bull put spreads could work, if placed inside that gap and below the simple moving avearages. Let’s see how 3/27 and 3/28 play out but overall, this trade has opportunities. Let’s see if they’re worth taking!
Enjoy your upcoming weekend friends!
