Target Corp. (TGT) opened sharply higher Wednesday partly in response to better-than-expected second-quarter numbers and perhaps due to a recent increase in shorts to 22.8 million shares from 20.9 million shares.
We looked at TGT on Monday, and summed up our thoughts this way: "The charts and indicators of TGT are mixed and I wonder if TGT can overcome the chart resistance around $90." More weight should have been given to the Point and Figure chart, which showed, "In this Point and Figure chart of TGT we see a bullish upside price objective of $96."
With TGT trading around $100 Wednesday morning another look is needed.
In the daily bar chart of TGT, below, we can see that prices gapped above the flat 50-day moving average line and the chart resistance in the $85-$90 area. The daily On-Balance-Volume (OBV) line is probably going to make a new high for the move up by Wednesday's close.
The Moving Average Convergence Divergence (MACD) oscillator could close above the zero line for an outright go long signal.
In the weekly bar chart of TGT, below, we looked back five years to see if a pattern emerged. The chart will show a small markup around $99-$100 when it gets updated.
TGT will still be above the 40-week moving average line and the weekly OBV line is likely to be stronger. The MACD oscillator had crossed to the downside but it will probably reverse back to the upside and a new buy signal.
In this updated Point and Figure chart of TGT, below, the gap does not exist as the method behind this charting technique fills in the prices. TGT has met its price target. This does not rule out further gains but it does suggest we should see a period of sideways consolidation before the next move for TGT.
Bottom-line strategy: TGT is likely to dip and fill some of this price gap or void. Maybe only to $95. If more than half the gap is filled it will be a sign of weakness.