Retailer Kohl's Corp. ( KSS) surprised analysts Wednesday morning with an earnings beat along with sticking to their positive guidance for the year.
Let's check out the charts and indicators which did not look all that constructive ahead of the numbers.
In the daily bar chart of KSS, below, I can see that the shares opened with a gap higher but are pulling back in early trading. Share prices gapped above the declining 50-day moving average line and then pulled back below it. It remains to be seen where the stock closes Wednesday.
The trading volume looks like it has been more active in the past three months. The daily On-Balance-Volume (OBV) line does not rise in the couple weeks leading up to earnings suggesting that traders were not being aggressive buyers ahead of the release.
The Moving Average Convergence Divergence (MACD) oscillator is below the zero line.
In the weekly Japanese candlestick chart of KSS, below, I see a bearish picture before Wednesday's price action. Then shares are in a longer-term decline and trade below the negatively sloped 40-week moving average line.
The weekly OBV line has been bearish for months and tells me that traders have been more aggressive sellers. The MACD oscillator is bearish too.
In this daily Point and Figure chart of KSS, below, I can see the early trading in KSS with no price gap. Here the software projects a potential price target in the $30 area.
In this weekly Point and Figure chart of KSS, below, I can see the same price target as the daily chart above -- $30.
Bottom-line strategy: I learned from my technical mentors (Ralph Acampora, Alan Shaw and Louise Yamada) that a stock needs to make a bottom and we need to see accumulation (buying) before a new uptrend begins. Unfortunately that is lacking in the charts of KSS.
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Here's where the charts indicate the stock may be headed.
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