Target Corp. (TGT) is the Stock of the Day at Real Money Wednesday as it beat its earnings expectations. TGT reported that comparable store sales rose 4.8% in Q1 vs. consensus of +4.1%, driven by traffic growth of 4.3%.
Comparable digital channel sales grew 42% for the quarter. TGT looks like it is navigating the new retail landscape. Let's check out the charts and indicators to see how far prices might go.
In this daily bar chart of TGT, below, we can see the price action through Tuesday's close. Prices are up around 6-8% ahead of the opening but that may not alter the indicators that much. This chart shows two rallies and two declines. The sell-offs seem to be more of a surprise as there are two meaningful downside price gaps or voids - one in November and the next in late April. The gap in April plunged prices below the 50-day moving average line and the declining 200-day line.
Even with today's pre-market price strength we are not likely to rally over these two indicators. The trading volume does not show any special activity ahead of earnings so traders do not seem to have anticipated the beat.
The daily On-Balance-Volume (OBV) line moved with the price action the past 12 months or mostly lower.
The trend-following Moving Average Convergence Divergence (MACD) oscillator is poised to cross to the upside for a cover shorts buy signal but a move above the zero line will take a while.
In this weekly bar chart of TGT, below, we can see a mixed picture with some indicators bullish and others still bearish.
Prices are below the declining 40-week moving average. Weekly volume looks like it has been declining since early 2018 but the weekly OBV line made a new high for the move up in March and April, unlike the price action.
The weekly MACD oscillator just crossed below the zero line for an outright sell signal and may have resulted in some traders shorting TGT ahead of the numbers.
In this Point and Figure chart of TGT, below, we do not have the price strength ahead of the opening plotted. The software has generated a downside price target of $67 being projected but that could change with the price strength today.
Bottom line strategy: I don't have a strong bullish opinion on TGT, even factoring in the pre-market rally. You cannot make money by standing aside but that is what I am going to suggest for now.
