Dollar Tree Inc (NASDAQ:DLTR) stock has been in a persistent downtrend over the past 12 months, shedding 48.1% of its value in that time. The security has managed only two positive months over the last year, and in November, it reached its lowest price since March 2020. However, from a contrarian perspective, DLTR has recently pulled back to a historically bullish trendline, suggesting a potential reversal opportunity.
The security just came withing one standard deviation of its 80-day moving average, a level that has previously acted as support. According to Schaeffer’s Senior Quantitative Analyst Rocky White, similar pullbacks occurred twice in the past three years, and both times, Dollar Tree stock posted an average one-month gain of 9.1%. If this historical trend repeats, a comparable move from its current price of $72.50 would position the stock above $79, a level it hasn’t seen since early September.
Analyst coverage remains largely neutral or bearish, with 17 out of 24 firms rating the equity a “hold” or worse. A shift in recommendations could act as a catalyst for a rally, particularly if investors begin to reevaluate their positions in the case of positive price action.
In the options pits, bearish sentiment appears elevated. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), DLTR's 10-day put/call volume ratio sits in the 72nd percentile of its annual range. This means options traders expect downside. Should the stock begin to rise, an unwinding of these bearish bets could accelerate gains.
