It was a very rough start of a new week for Kohl's (KSS) - Get Report Monday. The retailer dropped over 4.75% on above-average trade. After failing once again near its heavy 50-day moving average last week, the stock is now quite vulnerable. A clear break below the January lows could open up KSS to a deep selloff.
A month after its huge January 5 breakdown gap, KSS began to regain its footing near the $39.50 area. This key support zone was battered but did manage to provide enough support for shares to mount a rebound. KSS rallied back up to its 50-day moving average by late February before heading lower once again. By the first week of March, the stock was resting near the $39.50 support zone as the range narrowed dramatically. Last week's retest of the declining 50-day moving average now appears to be another important failure that could lead to a fresh down leg.
KSS should still be considered range-bound until the January low is clearly taken out. If this key level fails, patient KSS investors should keep a close eye on the $34.00 area. Back in May and June of last year, the stock left behind a major double bottom here. A base here would provide investors with a low-risk entry opportunity. Until then, KSS may prove to be a frustrating long.