Goal’s Inventory Defied Gravity When the Market Tanked: Well timed Purchase or FOMO? | Do not Ignore This Chart!

On Tuesday, Goal Corp (TGT) was one in all solely 9 shares that bucked the market selloff, popping 13% on a Runaway Hole because the Dow Jones cratered -404 factors, the S&P 500 fell over 1% and the Nasdaq plunged 1.56%.

CHART 1: STRONG VOLUME GAINERS SCAN ON TUESDAY 3.05.24. TGT got here up on account of a Robust Quantity Gainer scan on StockCharts’ scan engine. Goal Corp additionally held an SCTR rating of 91.2, indicating sturdy technical bullishness.

On the next day, Goal gapped up once more. So what’s driving the bullishness?

Goal’s holiday-quarter income and earnings crushed Wall Avenue expectations on Tuesday. Regardless of the corporate issuing a gloomier gross sales forecast for 2024, bullish buyers jumped in, inflicting worth to spike (and hole) twice. Earlier than taking a better technical look into TGT, although, some merchants would possibly ask:

• Was it prudent to comply with the bullish development post-earnings? In spite of everything, some analysts suppose that Wall Avenue consensus set a low bar for expectations. What if that is so?
• In case you are bullish on TGT, whereas preserving in thoughts the corporate’s delicate forecast for 2024, when could be an opportune time to enter an extended place, assuming that share costs will ultimately decline?

CHART 2: WEEKLY CHART OF TARGET (TGT). TGT finds resistance on the high of a buying and selling vary examined 3 times between 2022 and 2023.

Goal shares are removed from their 2021 all-time highs. Although the inventory hit a 52-week excessive immediately, that top coincided with sturdy essential resistance (see dotted blue line) and instantly fell again.

If TGT’s present uptrend had been to proceed, it must break above this stage.  That may definitely occur, however what are the probabilities of it taking place anytime quickly?

CHART 3: DAILY CHART OF TARGET (TGT). Robust divergence between worth and shopping for strain.

The second candlestick from the final session exhibits the 13% spike (and hole) that happened post-earnings. Runaway gaps, in line with technical analyst Thomas Bulkowski, are fairly bullish with solely an 8% likelihood of getting stuffed throughout the week of the hole. 

However the second hole, exhibiting sturdy rejection from the resistance stage we noticed within the earlier chart, is trying an increasing number of like a doable exhaustion hole, which has a 60% likelihood of getting stuffed throughout the week. Plus, check out the dearth of quantity driving the hole (see purple vertical dotted line).

Wanting on the Cash Movement Index (MFI), which is one thing of a volume-weighted RSI, we see a gradual divergence between it and TGT’s three-month surge, indicating that purchasing strain is certainly dwindling. This thesis is much more pronounced when viewing the Chaikin Cash Movement (CMF) alongside the MFI.

Look ahead to These Two Issues

Drawing a Fibonacci retracement could be a bit untimely, as the highest hasn’t but been confirmed. Nevertheless, supposing that it was, the 50% Fib retracement line would coincide with the Quantity-by-Worth indicator’s second largest bar, across the $140 vary.

Technically, if TGT had been to high right here, that vary would possibly function a good entry level. If that had been to be the case, you would possibly set a worth alert at $150 to name your consideration to the potential setup if and when it occurs. However on the basic entrance, you would possibly need to look forward to clear indicators that TGT has overcome its current dip in buyer visitors because it heads into fiscal 2024. Site visitors is vital to TGT’s earnings, significantly contemplating its forecasts for weaker quarters forward.

And simply to throw in somewhat extra context, July and August are the retailer’s strongest months relative to the broader market (at the very least from a 10-year seasonality perspective), as proven beneath:

CHART 4: 10-YEAR SEASONAL CHART OF TGT PERFORMANCE AGAINST THE S&P 500. Notice its strongest returns relative to the S&P 500 happening in July (2.4%) and August (3.3%).

How To Set a Worth Alert

Setting a technical alert at these assist and resistance ranges could be useful as you weigh your potential entry factors towards any market developments that will affect your resolution.

To entry the Technical Alert Workbench, comply with these steps:

• Log in to your StockCharts account.
• Click on on Your Dashboard.
• Click on the Alerts button or the New button within the Your Alerts panel.
• Within the Alerts workbench, select which kind of warn you need to create from the Alert Kind buttons on the high left.
• To create a worth alert, choose Worth Alert because the alert kind.
• Add a logo within the image field, set your worth set off, and select the way you want to be notified.
• Click on the Save Alert button.