Closeout retailer Big Lots (NYSE:BIG) has seen its share of volatility over the past eighteen months. Between a 60% plus rally from August 2011 to April 2012 and a big sell-off highlighted by two big gap downs, the stock was not for the faint-hearted.
Despite the volatility, the stock shows off plenty of positive developments both from a longer and nearer-term point of view.
On the multi-year chart note that the big move higher off the 2009 lows to the early 2012 top, following the sell-off the stock did manage to hold a key support level near $27, which also happened to coincide with the 61.80% Fibonacci retracement level of the rally. The continuation of the sharp move higher off the November 2012 lows earlier this month ripped right past the down-trend line that had been in place since early 2012 highs. As such, through this longer-term lens the stock continues to act constructive.
Zooming in closer, since the break of the downtrend line (blue) the stock has nicely consolidated in a sideways fashion and thus working off the immediate-term overbought levels that flashed in early March. This consolidation move above past resistance (now support) is also shaping a bull flag that increasingly looks to be ready for a move higher.
From a momentum point of view Big Lots still has plenty of room to the upside if we look at Stochastics on both the longer and shorter term charts.
In short, any meaningful daily close above $36.10 would break the stock out of the bull flag and on to a first target near $37.50 followed by a possible continuation towards the $40 mark.