FRED

There is a potential bullish setup in FRED and it might be time to go long.

Fred's Inc operates discount general merchandise stores in the southeastern United States.  It also markets goods and services through Fred's Super Dollar Stores and Pharmacies and Fred's Xpress Pharmacies.

The stock has formed what is traditionally known as a 'rounded bottom'.  The trouble with 'Technical Analysis' is that people who don't understand it think its mysterious.  Many so-called technicians talk about esoteric things like 'Gann Angles' and 'Fibonacci Retracements' and this makes this type of analysis seem like a waste of time.  Its too bad because there is validity to this type of analysis if you stick to the basics and understand the fundamentals.

The important thing it to understand what the pattern is displaying.  Think about the 'rounded bottom' pattern here in FRED.  It isn't mysterious or esoteric.  It simply shows that from the beginning of September through early November the price went lower because the forces of supply, or the sellers, overpowered the forces of demand, or the buyers. 

Then in early November the forces of demand started to overpower the forces of supply, and that caused the price the rise.  So the conclusion is that now the forces of demand will continue to overpower the forces of supply and this will cause the stock's price to continue to rise.

My price target is $12 because this is the level that it was at when the selloff started in early September.  There will be other sellers at that level because those who bought it and have been under water since then will be eager to sell it when the can get out at breakeven, so that should put a top on it.  Coincidentally, it is the same price target that the analyst at Sidoti & Company has on it.