Kohl's Corporation (KSS) was upgraded by a major sell-side firm. Bank of America (BAC) lifted KSS to a Buy rating from Neutral on its view the department store operator is in a position to recover. That's all well and good, but I prefer to see what the charts and indicators are doing.
In this daily bar chart of KSS, below, we can see that prices made a peak back in November and declined to early April -- weaker than the movement of the broad market. Prices nearly tripled into early June, but prices have since given back half those gains. KSS is still well below the declining 200-day moving average line, while prices have been hugging the rising 50-day moving average line. Trading volume has been very active since March, but the On-Balance-Volume (OBV) line has been up and down several times and suggests we are looking at a trading vehicle and not an investment. The Moving Average Convergence Divergence (MACD) oscillator has turned lower and is crossing the zero-line for an outright-sell signal.
In this weekly bar chart of KSS, below, we can see a weak picture. Prices have been in a decline since the middle of 2018. The 40-week moving average line has a negative slope and prices are well below it. The weekly OBV line has been in a decline from April of 2019 and that tells us there has been a lot of liquidation (selling). The MACD oscillator has been below the zero line since the beginning of 2019 and only recently crossed to a cover-shorts buy signal.
In this daily Point and Figure chart of KSS, below, we can see a modest upside price target of around $24. Not much to write home about.
Bottom line strategy: Calling the market is easy, but getting it to answer is hard. It is great that KSS got a fundamental upgrade, unfortunately the charts haven't gotten the message yet. Avoid the long side for now.
