The last time we highlighted Target Corp (TGT) in our Daily Stock Report was on August 13, 2024. Back then, the shares were exhibiting a steady downtrend following its peak in late 2021. The shares were deeply entrenched in the unfavored red zone of many of the reports it was found in on the SIA Platform including the SIA S&P 500 Index. The SIA Platform issued a Red Unfavored signal back on May 18, 2022, at a price of $161.61. At the time of our last commentary on August 13, 2024, the shares were at $135.02 which represented an approximately 17% drop in price since the red unfavored zone signal. Since then, the shares have continued to weaken and the current closing price is $96.58, which represents an additional 28% drop since the August 13, 2024, closing price. This represents a total decline in price of approximately 40% since May of 2022.
This exemplifies the value of staying away from investments in the red unfavored zone. Many advisors may instinctively look for names in the unfavored zone with the mentality that the shares are oversold and a “value buy” is in play. However, “value buys” may, in fact, be “value traps” and the shares may continue to fall further in price which is what has occurred in this example of (TGT). This investigation reinforces SIA’s methodology not to pursue a “contrarian” mindset to names in the unfavored zone which are not exhibiting any relative strength as the sellers are in control and not many market participants are looking at the name.
Let’s dive in and analyze the candlestick chart to consider what may lie ahead for Target Corp. Back in August of 2021, and November of 202, we see a classic double top pattern where the shares bumped its head at the $240.00 level before the long term downtrend materialized. The shares found support at the $100 psychological zone back in Oct 2023, and a brief rally occurred where the shares finally hit a ceiling at $175 in April of 2024, before a downtrend resumed once again. Now most recently we see the $100 whole number support level failed to hold and the shares established a lower low. Next support may be found at the $80.00 area where the shares were trading at back in March 2020. To the upside, resistance is at $100 as prior support now becomes new resistance.
In looking at the candlestick chart we see a steady downtrend in place since late 2021. In our last report on Target back in August, we identified the $130, $120, and $101 area as possible support levels which has failed to hold. Currently, the shares have already broken below those levels, and a new lower low has materialized earlier this month when the shares could not hold at the psychological $100 level. The next possible area of support can now be found at $87.81 and, below that, $79.53. If the shares can rally to the upside, resistance is at its 3-box reversal of $98.89, which is close the $100 whole number and psychological level. If it can break above this number, next resistance will be at $111.37. With a SMAX score of 0 out of 10, TGT is exhibiting no strength whatsoever against the asset classes.
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