This Is Kroger’s Must-Hold Support Level on Earnings

Kroger popped initially on its solid earnings report but shares have wavered since. Here's how to trade the stock now as key support looms.
Author:
Publish date:

Kroger  (KR) - Get Report shares were up slightly on Friday after the grocery giant reported earnings.

Shares initially popped about 4.5% in premarket trading after Kroger announced better-than-expected second-quarter earnings.

Kroger also beat on revenue expectations as it grew sales 8.2% year over year. The company also announced a $1 billion share repurchase plan and provided full-year guidance ahead of estimates.

With all of that, some investors are surely surprised by the stock’s muted reaction. In fact, Kroger fell as much as 3.25% in early regular-hours trading, although buyers have stepped in to buy the dip.

Will the continue to do so?

Trading Kroger Stock

Daily chart of Kroger stock.

Daily chart of Kroger stock.

Some parts of retail have done quite well, as evidenced by stocks like Walmart  (WMT) - Get Report and Target  (TGT) - Get Report. Kroger bulls are hoping this name is added to the list, too.

Earlier this month, Kroger had pushed up to new 2020 highs. However, it continued to struggle with the $36.50 area and pulled back to the 50-day moving average ahead of earnings, holding that mark for three consecutive sessions ahead of earnings.

After this morning’s buy-the-dip action, Kroger stock will look to make it four straight sessions of holding this key average.

Bulls now also have a reference low to use from Friday, at $33.80.

Ideally Kroger will hold up over the 50-day moving average. But even if it doesn’t, that’s the mark I’m watching. Instead, I’m watching the 100-day moving average, which has been support multiple times since February.

As long as Kroger continues to close above this mark, then bulls remain in the driver’s seat. Ultimately they will be looking for a retest of the $36.50 to $37 area, and if it gets there, they will look to see if Kroger can break out to new highs.

On the downside, a break of the 100-day moving average puts the 200-day moving average in play down near $31.

Kroger stock may not be an exciting trade like some of the high-flyers in tech, or even some of the recent earnings plays like Peloton  (PTON) - Get Report. However, the setup is very straightforward.

So long as support and the trend holds, investors can be buyers of Kroger. That’s less than $1 below current prices at this moment. A break of support and traders can cut out and take their stop-loss, while fishing for several dollars per share on the upside.