We first looked at supermarket player Kroger as a long-term investment idea back on October 1st, 2012, in this blog post. The stock was trading at $23.77, and we surmised that the multi-year symmetrical triangle pattern could easily resolve much higher imminently. Shorter-term timeframes indicated much-improved price action. And the stock and sector, by and large, were castigated as being dead money.
Updating Kroger’s monthly chart, below, we can see the stock resolved the triangle much higher, up to a recent high of $38.20. You can also see the severe extension away price has attained from its monthly chart moving averages. As a result, I would be trading around a core long-term portfolio position here, with the intention of looking to buy back in the low-to-mid $30’s in the coming months. In other words, the stock is now abnormally steep on this timeframe and I would take at least some profits off the table.
To my eye, the long-term investment thesis remains intact as long as $30 acts as a floor from here on in.
The stock could easily continue to stretch higher yet. And that is why it is prudent to maintain that core position in a long-term portfolio, instead of blasting in and out all at once. However, at this stage even if a blow-off top is going to occur it is prudent to not be at a full-sized position.
____________________________________________
