A retail revival appears to be in full swing: the brick-and-mortar companies are staging a technical comeback as trades and investors are migrating back into these names. In addition to many of the retail companies hitting long-term support levels, there is a seasonality story behind the bullish move.
Each year, the period between Labor Day and the day after Thanksgiving sees a surge in retail stocks as traders boost value based on the combination of back to school and holiday shopping. The trend has a clear “end point” just after Thanksgiving as traders begin to “sell the news” as sales numbers trickle in after Black Friday.
Supervalu Inc. (SVU)
Supervalu shares are finally looking like they’ve hit a bottom that matches the 2013 consolidation that served as a launching pad for the stock. On a shorter-term basis, SVU stock is moving into a bullish trajectory with one test remaining.
- After dipping below $20 in August and early September, the grocery chain’s stock is breaking into a bullish trend as it has broken above the 50-day moving average over the last two days.
- Momentum on Supervalu shares is about to flash a bullish signal as the MACD and Chande Trend Meter are both on the verge of providing bullish signals for the trend investors. This will fuel a move higher as volume increases.
- Currently, the stock has about 17% upside potential from current prices before we hit intermediate-term resistance in the form of the 200-day moving average and the August highs. This is ample room for nimble traders to profit.
Target Corporation (TGT)
Target is a perennial name in terms of the seasonality. The stores pop into action starting in October as shoppers get busy. Historically, TGT stock outperforms the S&P 500 58% of the time in October over the last 20 years.
This year, the technical charts indicate the same expectations.
- Recent positive news put Target into a volatility rally that closed-in on $60 as the stock became overbought. Shares have successfully consolidated and held support as they prepare another advance.
- The recent consolidation included a pullback to support at the stock’s 200-day moving average. This is a sign that technical traders are actively buying the stock on dips.
- With a short interest ratio of nearly 8, Target shares are lining-up for a short squeeze rally that will likely be triggered with a cross above $60.
TJX Companies (TJX)
Discount retail stores have been making strides lately as shoppers continue to hunt for bargains.
TJX is breaking into a strong intermediate-term bullish trend that is supported by momentum and strengthening technicals with one test to pass.
- Momentum indicators on TJX have moved into bullish signals as investors are now migrating into the stock. This is building bullish pressure for the stock.
- As of the beginning of September, TJX stock transitioned into a bullish technical outlook as it hit a seasonally strong period. Over the last 20 years, TJX has outpaced the S&P 500 63% of the time, returning an average of 2% better than the benchmark index.
- The stock faces a challenge as shares are in the process of breaking above potential resistance at their 200-day moving average. A move above this trendline, currently at $74.21, will open-up room for the stock to move to a target of $80.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.