Is Fred Too Sexy for Resistance?

Fred's, Inc. (owner of retail discount stores and full service pharmacies) is surging more than 20% today on this news, as the drugstore stocks at-large are catching a nice bid like CVS and RAD. 

FRED had been having a rough 2017 headed into today, as it was lumped in with the dreadful retail sector. 

Thus, an important takeaway from a technical perspective can be seen on the FRED daily chart, below. 

Note how the huge rally in the context of a downtrending chart leaves us with a tough spot to consider going long, since the stock jumped directly into prior broken support. This $13 area thus represents overhead supply, or likely and expected initial resistance. 

Since the overall trend to the chart is still down, the presumption is that rallies will be sold into until proven otherwise, not the other way around. Therefore, bulls carry a heavy burden to hold this bounce and build on it to eventually overpower the $13 level. 

Because of how sloppy the chart remains, I favor other discount stores (beyond drugstores) with better charts like OLLI, which may very well be a new retail leader in the coming years.