Like Its Clothes, TJX Stock Is a Bargain

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It’s the Monday after Black Friday, and for many investors and traders, that means keeping a close look on retail stocks as holiday shopping data trickles in.

beat the bellBecause the world of retail stocks is so large, it’s easy to get caught up with the biggest or most popular stocks, but for active investors and traders this is a classic case where it pays to focus on the highest-probability setups. Right now, for instance, shares of off-price retailer TJX Companies Inc (TJX) — the owner of T.J. Maxx, Marshalls and other stores — look good after TJX stock scored a major breakout move last week that seems to still have its legs.

Before the start of trading on Nov. 18, TJX reported third-quarter earnings of 85 cents, in line with analyst estimates and up 13% on a year-over-year basis. However, investors took issue with lowered 2015 guidance, from a previous range of $3.10-$3.18 per share down to $3.09-3.13, and below analyst estimates of $3.17. Furthermore, for the fourth quarter, TJX said it sees sales coming in between $8.10 billion and $8.2 billion, also below estimates that called for $8.34 billion.

However, in the days after the report, several analysts reiterated their positivity on TJX stock; for example, JPMorgan raised the stock to an “overweight” rating and upped its price target from $63 to $75.

TJX Stock Charts

Looking at the multiyear logarithmic chart of TJX stock, we note that at the summer lows, TJX once more held support at the multiyear support line, and since then shares have broken to fresh all-time highs. Upside momentum — as represented by the Relative Strength Index (RSI) at the bottom of the chart — is also curling back up and is not lagging far behind the the breakout move from last week.

tjx stock chart weekly

Zooming in on the daily chart, we see that on Nov. 18, TJX stock had an intraday selloff that held at the 50-day simple moving average on a daily closing basis and left behind a bullish hammer candle that saw follow-through buying the very next trading day. With last Friday’s 2.54% rally, TJX stock then cleanly broke past horizontal resistance that stretches back to November 2013.

From a multiweek perspective, note that the entire price movement from the early November highs down to the post-earnings lows acted as a consolidation move below the 2013 highs. This was constructive price action that, with the resulting breakout from last Friday, now puts the stock into a favorable position — at least from a multiweek/multimonth perspective.

tjx stock chart daily
Click to Enlarge

Active traders and investors could look to buy TJX stock around the $66 area, using a price target at $70 and a stop-loss near $64.

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Download Serge’s trading plan in the Essence of Swing Trading e-book here. As of this writing, he did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2014/12/tjx-stock-charts-trading/.

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