Kohl's Corp. (KSS) opened slightly lower on Tuesday as traders react to their latest profit beat. Jim Cramer has been focused on retail names this week and Kohl's is the 'Stock of the Day' at Real Money.
Let's check the charts and indicators to see if this opening strength can be sustained.
In this daily bar chart of KSS, below, we can see that prices have been in a downtrend the past 12 months. Prices bounced yesterday to the underside of the bottoming 50-day moving average line. The longer 200-day line is declining and well above the market.
The On-Balance-Volume (OBV) line shows a long decline to a June low confirming the weak looking chart. The OBV line now shows a small rise over the past two months - perhaps driven by investors anticipating a better quarterly report.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is just below the zero line so strength today could push the oscillator above zero for a buy signal.
In this weekly bar chart of KSS, below, we can see the up and down path of prices the past three years. The decline in the past year brought KSS back down to the top end of a consolidation zone in 2017. KSS is below the declining 40-week moving average line.
The weekly OBV line is interesting in that it only shows a decline the past three or four months but prices have been declining much longer.
The MACD oscillator is in a bearish mode below the zero line but strength today and in the near-term could generate a cover shorts buy signal.
In this Point and Figure chart of KSS, below, we can see the decline of this year and a potential price target of $35. A rally to $52.57 might be needed to turn the chart positive.
Bottom line strategy: KSS may have made a price low this month but it will probably take weeks or months to put in a proper base pattern. If you think the fundamentals of KSS are favorable then I suggest you take your time and wait for the charts to give you confirmation.