Target Gaps to the Upside Showing Its Technical Strength

Let's see what the charts are up to now.

Target Corp. (TGT) is the 'Stock of the Day' at Real Money today. The retailer posted stronger-than expected third quarter earnings before Wednesday's market open, and raised its full-year profit guidance.

In this daily chart of TGT, below, we can see that prices gapped to the upside making a new high for the move up. Prices were giving a bullish clue as they traded sideways to higher from late August. Prices are back above the rising 50-day moving average line.

The 200-day moving average line is also pointed up and well below the price action. Trading volume did not shrink the past two months which suggests that traders and investors have remained active in the weeks leading up to this earnings release.

The On-Balance-Volume (OBV) line followed the price action since late August.

The Moving Average Convergence Divergence (MACD) corrected down to the zero line but should now turn upwards for a fresh outright buy signal.  

 

In this weekly bar chart of TGT, below, we can see a bullish alignment of prices and indicators. TGT is above the rising 40-week moving average line.

 

The weekly OBV line has been trending higher for much of the last three years and the MACD oscillator has been bullish since March.  

 

 

In this Point and Figure chart of TGT, below, we can see the price action without a gap. Here the software has projected a $132 price target for the retailer.  

 

 

 

Bottom line strategy: TGT has broken out to a new high with at least a $132 price target. Some of the gap created on the opening Wednesday is likely to be filled so traders might consider going long at the midpoint of the gap. Risk below $115 for now.

 

Employees of TheStreet are prohibited from trading individual securities.