Big box retailer Target Corporation (NYSE 🙂 handily exceeded expectations for it when it released its results on Tuesday. The company saw record growth of 21% on sales of more than $ 15 billion, greater than total sales growth for the past 11 years combined. Part of the growth was due to a greater online presence.
Nevertheless, Target's stock, which has risen 81% in the past 12 months, fell 6.75% yesterday after the Minneapolis-based company revealed that it will invest $ 4 billion a year for several years to maintain its increase online focus.
Ironically, while online sales are a major part of the retailer's massive earnings, the investor just didn't "buy" it.
The sharp sell-off was likely fueled by traders looking for short to medium-term profit rather than long-term investors looking for buy and hold value. Nevertheless, the preference of the stock is lower for the time being.
The stock fell below its upward trend for the first time since the April bottom. In other words, this is the original trendline – it has not been adjusted.
That may make this offense a more important eye-catcher. At the same time, the stock was trading at a price lower than the previous low of $ 176.93, made on Jan. 27. Coupled with the February 9 peak, which was below the January 13 record high, the stock established a downtrend, with a downward series of peaks and troughs.
We could also witness the development of a large H&S top, whose neckline can support a bounce, providing the return movement after the failure.
Of note, the volume associated with the downward breach was the highest since August 19, after QE 2020 earnings fell past estimates, with quarterly earnings growth of 80%.
Even then, Target's e-commerce services showed dramatic growth, but without the unwanted news of additional spending offered by current guidelines. The highest volume previously was on the decline of the first peak – a potential V&G head. Before that, the highest volume was at the peak of the head, echoing the kind of trading activity one would expect in the midst of a transition from an upward to a downward trend.
Declining participation is even more evident on the weekly ticket.
The volume is on a downward trend, which gives a negative divergence from the upward trend of the price. While not a crystal ball predicting a decline, added to the weight of the additional evidence, it makes a compelling case for more downward action, especially if the price were to fall below the USD 165 level, turning sentiment sour. Trading Strategies
Conservative traders should wait for the price to fall below $ 165, which will likely turn more bulls into bears.
Moderate traders would wait for the price to rebound from the USD 165 – USD 170 range to retest the fledgling downtrend with a rally that would find resistance.
Aggressive traders could go short at will, provided they understand and accept the risk of fewer confirmations in the midst of a tumultuous market besieged by shifting, even conflicting interpretations on the same themes.
That is why a trade plan is a must. We don't know what the future holds and we only work on statistical patterns; therefore, we recommend that you only trade on a trading plan that meets your needs.
Here's an example:
Trade Sample
Admission: $ 182
Stop Loss: $ 185
Risk: $ 3
Goal: $ 170
Reward: $ 12
Risk: Reward Ratio: 1: 4
Author's Note: This is an example only. There are many ways to approach the same trade, based on your timing, budget, and temperament. We have enabled a recovery based on current market sentiment. That avoids a whip saw, but you could also lose the opportunity if the price doesn't go as high as our entry level. Take small risks to gain experience until you learn how to adapt plans to your needs. The focus should be that there are no "certain things". Consider your risk tolerance and only enter trades that reward your risk with the appropriate premium.
