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Kohl's Clings to Key Support After Earnings Report

Kohl's stock beat expectations, but earnings fell 55% year over year. Guidance was even worse. Here's the key support level to watch now.

Kohl’s  (KSS)  stock is off roughly 6% after the retailer reported earnings. 

The silver lining — if the bulls can consider it that — is that shares were down as much as 10% earlier in the day but are being bid higher. 

It’s been a mixed week in retail as earnings continue to roll in.

We saw a bullish reaction to Walmart  (WMT)  and a not-so-great one to Target  (TGT) . Now we’re seeing a somewhat bullish reaction to TJX  (TJX)  and a bearish one to Kohl’s. 

Kohl’s results specifically were hardly inspiring

Earnings beat expectations but fell 55% year over year, while revenue also beat expectations but fell 8%. 

Further, the retailer now expects earnings of $2.80 to $3.20 per share for the year, less than half its prior outlook of $6.45 to $6.85 a share.

Back in July, a failed buyout sent Kohl’s stock plummeting.

At the start of August, I highlighted a path back to $34.50, which was good for a near-20% rally. But that level was hit this week and is now acting as resistance. 

Let’s take an updated look with the earnings out of the way.

Trading Kohl’s Stock

Daily chart of Kohl's stock.

Daily chart of Kohl's stock.

Given the company’s guidance, I’m surprised this stock isn’t getting hit harder than it is. 

The stock today is bouncing off the 21-day moving average, leaving a low near $30.50. Keep an eye on this level going forward. Today’s buy-the-dip response is impressive but the results here are not good.

I can’t imagine Kohl’s stock being a go-to name for investors if volatility begins to increase — not after a quarter like that.

If the stock loses $30.50, it could kickstart more selling pressure back down to the $26 to $28 range, which was solid support in the second quarter. That zone shows up nicely on the weekly chart as well, as shown below. 

Weekly chart of Kohl's stock.

Weekly chart of Kohl's stock.

If we lose this support zone, the low-$20s are back in play, which was solid support in 2020.

As for the upside, the bulls need to see Kohl’s stock regain last week’s high near $33.25 and active resistance via the 10-week moving average.

If it can do that, then $34.50 and this week’s high at $36.60 are technically in play.

Above those levels and we can reevaluate Kohl’s for more upside. But as of now, that seems like a tough ask, as I believe that guidance will be a negative overhang on the stock.