With just four trading days left in 2022, the S&P 500 is down 19.33%. This puts the large-cap index on pace for its worst year since 2008, when it fell 38.49%.
Year to date, the Nasdaq Composite is down 32.9% and the Dow Jones Industrial Average is off by just 8.63%. We're entering the last week of a year that I'm sure many investors would prefer to forget.
When markets fall, it's interesting to see which names are left standing. Institutions have chosen to sell former darlings such as Amazon (AMZN) , Tesla (TSLA) and Meta Platforms (META) . which so far this year have lost 48%, 65% and 64%, respectively.
However, if a stock is up in the midst of this carnage, it tells me that institutions have decided to keep it. Most likely, an institutional research department has uncovered something positive about that stock.
This brings us to TJX Companies (TJX) , parent of the TJMaxx, Marshalls, HomeGoods and Sierra off-price retail chains. We recommended TJX in the early days of the pandemic, when it traded at $54. The stock has gained 47% since then and is up 5.23% this year in a rough market.
What does 2023 have in store for TJX? Let's go to the charts to find out.
First, let's compare TJX (blue) to the retail sector, represented by the SPDR S&P Retail ETF (XRT, green) and the broader market, denoted here by the SPDR S&P 500 ETF (SPY, red). The comparison begins at the start of the third quarter. In a difficult market, TJ Maxx has trounced both its sector and the market.
Source of charts: TradeStation
Moving to the TJX individual chart, the stock is just 2% away from its all-time closing high of $81.03 (arrow). That record was set just one month ago, on Black Friday, Nov. 25.
On its daily chart, TJX has formed an A-B-C-D pattern. This bullish formation projects the stock to the $88 area.
Why is 2023 shaping up to be a positive year for TJX? The company provides quality products at a reasonable price by taking advantage of special situations, such as order cancellations and liquidations by other retailers. The result is a sort of treasure hunt as shoppers are never quite sure what they'll find.
Because of this, if a recession occurs in 2023, as so many analysts are predicting, TJX should have no problem obtaining inventory at a discount. This strategy doesn't make TJX recession-proof, but it should act as a buffer in the event of an economic downturn.