Yahoo Finance Trade of the Day: Target Corporation (TGT) Stock Is Waking Up
Shares of retail stocks like Target Corporation (NYSE:TGT) after a miserable showing year-to-date began to bounce in recent days and weeks. On the charts, this is increasingly looking promising for another push higher and, in the case of TGT stock, back toward a very-well-defined upside price target.
Source: Mike Mozart via Flickr (Modified)
At the risk of sounding like Debbie Downer, retailers such as Target continue fighting an uphill battle in the ever-more-quickly-changing online retailing space. While this is keeping me away from longer-term bullish bets on many traditional retail stocks, it will from time to time offer up good reward-to-risk trading opportunities for active investors and traders to sink their teeth into.
The key to these trading setups in retail stocks in my eye is the same as with any other trade idea — namely to keep a close eye on and differentiate between time frames. For example, just because a stock is flipping to near-term bullish does not (yet) make it a medium- or longer-term bullish call.
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To wit, retail stocks as a group and as represented by the SPDR S&P Retail (ETF) (NYSEARCA:XRT) as per my proprietary market trend scanners remain intermediate-term bearish but recently flipped to near-term bullish. As such and until these stocks were to flip to intermediate-term bullish (which I have my doubts on), any trades such as the one here described in TGT stock will be near-term in nature.
TGT Stock Charts
Moving averages legend: red – 200 week, blue – 100 week, yellow – 50 week
Looking at the multiyear weekly chart, we see that TGT stock as a result of the first quarter 2017 sell-off had reached deeply oversold readings by June.
Note that the MACD momentum oscillator at the bottom of the chart had reached readings last seen during the financial crisis in 2009. Through this lens and for now from a trading perspective, this does smell like an interesting potential bounce setup in this name.
Moving averages legend: red – 200-day, blue – 100-day, yellow – 50-day
On the daily chart, we see that although TGT stock made fresh lows in June, it has been in the process of tracing out a bullish inverse head-and shoulders pattern (blue bubbles) since April. With the rally on Wednesday, TGT stock broke above the neckline (black horizontal) of this bullish formation. While this now also has the stock firmly up against its red 200-day simple moving average, the inverse head and shoulders pattern does look to ultimately push this stock higher still.
How much higher you ask?
Note that on Feb. 28, TGT stock, following its earnings report, dropped a steep 12%. I marked the still-unfilled part of this down-gap with the blue box on the chart. While not all gaps fill, given the inverse head-and-shoulders pattern and near-term bullish trend in TGT stock, the upper end of this gap near $67 does look like a reasonable upside target. Any sharp bearish reversal on a daily closing basis could act as a stop loss signal.
Check out Anthony Mirhaydari’s Daily Market Outlook for Sept. 14.
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