Chart of the Week: Target
Good morning everyone. Happy Wednesday. It’s time for our chart of the week, and this week we’re going to be focusing on big retailer Target; TGT is the symbol. So let’s take a look at this one here.
As you’ll notice from back in August, the stock had a nice drop here in the early part of August. And found its bottom in the $130s area and bounced back sharply. A couple of gaps up here. And then all of a sudden that big earnings report came in and the stock really took off. Opened up though, at the highs of the session at $167 and could not find any buyers over here. You can see that this big black candle means it closed at the lows of the day – about 7-8 points off of the highs.
So we know that’s the level of resistance we need to pay attention to. So that’s right there, about $167 and change.
But since then, the stock came back, lost some of that ground over there. Nearly filled the gap. Almost filled that gap from back in late August. But found a bottom right around the 50 day moving average, which is this blue level, bounced up here, made a higher low – also off that 50 day moving average – and now it’s challenging the upper Bollinger band.
What I find interesting about Target here, is it’s made this nice W pattern. And it’s carving out the right side of the base, right there. And it’s doing it rather quietly. Relative strength is not overbought here. We do have a new buy signal on the MACD. And look at money flow. Money flow just went green.
So, while this is not your typical technology stock that’s ripping higher, which we’ve seen quite a few. And in fact, I looked this morning at several names that I like, but they are super extended, like Celestica, CLS, and Apple.
But this stock seems to wander around and build a nice base when nobody’s looking. And that’s what I like about Target here. They’ll report earnings in about a month or so – around the middle of November. And I think the stock is going to build, maybe go sideways for a little bit – maybe $150s to low $160s here for a little bit longer.
Maybe go sideways here and then start to make a move up towards that resistance level, and then we might challenge that level when earnings come out in November.
I like Target here, especially in front of the holidays. Maybe look at some January or February call options here.
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