We're Buying Target After Institutional Volume Pushes New Stock High
Pros are watching this critical level as Target shares jump nearly 7%.
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As a game, I sometimes communicate with my daughter through stock symbols. She’ll ask if we can go to (MCD) (McDonald's), and I’ll say fine, right after we stop at (TGT) (Target).
In all the years we’ve played that game, I’ve never bought shares of TGT — until now.
On Tuesday, a red day for the markets, Target stood out like a bright green thumb. The Minneapolis-based retail chain jumped to a 6.75% gain to close at a 52-week high.
Everybody Hates Target
Lately, it seems like everybody hates Target. People on the right are angry because the company carried so-called “woke” items they deemed inappropriate. Folks on the left are upset because Target acquiesced to the right’s demands to stop selling those items.
I'm sure the reasons are deeper than that simple explanation, but that's not the point.
The point is, we love companies that everyone hates, because eventually cooler heads prevail. However, Target's charts simply didn’t justify a buy order until now.
Target's Charts Are Finally Bullish
Target roared to a one-year high on extremely heavy volume on Tuesday, a sign that institutions are buying the stock. After Tuesday’s 6.75% gain, the stock is now up by over 20% year-to-date, a sign of strong momentum.
Here’s Target’s daily chart:
Target’s weekly chart reveals a stock with room to run. The stock is still 54% below its all-time high, set in 2021.
On Tuesday, Target reported strong earnings for its just-ended quarter. Then the company raised its full-year outlook for sales and earnings in 2026.
Target is finally back on track, and we’re on board for the ride.
S&P 500
On Tuesday, the S&P 500 finished lower by about 1%, but rallied from a deeper intraday selloff that saw the large-cap index drop to its lowest level in three months. Markets responded positively to news that the U.S. would take measures to facilitate maritime travel through the Strait of Hormuz.
That long wick on the bottom of Tuesday’s candle demonstrates the bears’ failure to hold the S&P 500 down. The resulting bullish candlestick pattern, similar to a hammer formation (circled), indicates that the path of least resistance for the S&P 500 is higher.
Nasdaq Composite
The Nasdaq Composite also reached a three-month intraday low, but this chart is in a precarious position. The tech-heavy index came within 100 points — less than 0.5% — of its 200-day moving average (red) before climbing off its lows (arrow).
Key Level to Watch
The key level to watch is 22,000 on the Nasdaq Composite, which is just below the index's 200-day moving average, currently located at 22,035.
It's critical that the Nasdaq Composite remains above the 22,000 to 22,035 area. A series of closes below those figures would likely trigger additional selling, and ultimately drag the S&P 500 down with it.
At the time of publication, Ponsi was long TGT.
