Target stock is getting crushed after reporting earnings. Here’s are the must-know support levels to watch now.
Shares of Target (TGT) – Get Free Report are getting walloped on Nov. 16, down about 13% after the retailer reported earnings.
Bulls were optimistic on Nov. 15, as shares rose 3.3% on the day and as the stock hit its highest level since August.
The solid earnings report from Walmart (WMT) – Get Free Report helped fuel yesterday’s gains, but Target’s earnings report is throwing cold water on sentiment today.
Despite beating on revenue estimates, earnings fell 49% year over year and badly missed analysts’ expectations.
Worse yet, guidance for the holiday quarter was uninspiring. In the words of management, “In the latter weeks of the quarter, sales and profit trends softened meaningfully.”
Suddenly, the optimism that came from Walmart’s quarter is being wiped out after Target’s quarter. Let’s look at the chart.
Trading Target Stock on Earnings
Daily chart of Target stock.
Chart courtesy of TrendSpider.com
With the stock’s near-3% dividend yield and with shares trading at sub-20 times this year’s earnings, investors are looking at Target as a potential buy-the-dip candidate.
Despite poor guidance and the terrible decline in earnings — both this quarter and forecasts calling for a 41% decline in earnings this year — the stock is holding where it needs to on the charts.
It’s bouncing just above prior support in the $145 to $148 zone. That area buoyed Target stock in September and October before shares ultimately roared to $180.
The level to watch from here is $152.50.
That was last week’s low before the market’s huge upside reversal on a better-than-expected inflation report. That day, Target stock rallied almost 7.5% and ignited a huge multi-day rally.
If the stock can’t regain and close above the prior low from that move — the $152.50 level — then the $145 to $148 zone is likely in play.
If this area fails as support, then the $138 to $140 zone is back on the table, which was support in the summer.
On the upside, a move above $152.50 opens the door to the 50-day moving average near $160. If Target stock can find a way to reclaim all of its short-term moving averages — the 10-day, 21-day and 50-day — then technically speaking, the gap-fill could be in play up at $177.
For now, though, traders should use caution unless Target can reclaim $152.50.