Big Lots (BIG) has been one of the best performing stocks this year. As shown in the first chart below, it has been trading in a tight upward sloping channel for pretty much the entire year -- bouncing off the bottom and top of the channel as it has worked its way higher. If one were to just look at this six month chart, it would seem that all was well for the stock to continue with its positive momentum. But it's always important to look at multiple time frames when analyzing price charts to get the entire picture of a stock's price movements.
When we back the chart out a bit and go back to the start of 2006, it shows that there is significant resistance right around current price levels. After a rally that was similar to this year's from early '06 to early '07, the stock fell by as many points as it has risen this year. Now that's a V-shaped bottom that only the entire market can hope for.
The first chart looks extremely positive from a technical point of view. But the second one clearly shows that the stock still has a lot of work to do to break above its most recent highs. There is simply a lot of supply left over from the last time the stock was this high. If it can break through those highs, however, the positives will re-emerge.
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