Target Corp. (TGT) was losing about one-quarter of its market value in pre-market trading Wednesday as investors, traders and analysts react to the retailer's disappointing first-quarter earnings released this morning. Let's check the charts and see what we can glean from the indicators.
In this daily bar chart of TGT, below, we have to imagine a sharp downside price gap with TGT anticipated to open about $50 per share lower to around the $164-$163 area. This would put prices below the current frame of the chart. Prices were weak ahead of today's earnings report. Prices were below the declining 50-day moving average line and the declining 200-day line. The On-Balance-Volume (OBV) line is weakening while the Moving Average Convergence Divergence (MACD) has fallen below the zero line for an outright sell signal.
In this weekly Japanese candlestick chart of TGT, below, we can see a bearish picture. Prices are pointed down and could gap below the February low. The slope of the 40-week average line is negative. The weekly OBV line is pointed down and the MACD oscillator is below the zero line in sell territory.
In this daily Point and Figure chart of TGT, below, we can see a downside price target of $186, which will be left in the dust on the opening.
Bottom line strategy: The opening of trading for TGT longs will be very painful. The trading volume is likely to be very heavy for the first 90 minutes of trading. It will be interesting to see where traders might come in to cover shorts or try to pick a bottom. A 50% haircut from the $270 cannot be ruled out.
