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Target Revenue a Bit Off Analysts' Target - Here's How to Trade the Stock

Target stock is mixed in Tuesday's trading session, which is fitting after a mixed quarterly report. The charts are a little clearer about the stock's trajectory.

Target  (TGT) - Get Report shares have been under pressure lately, which comes as little surprise given the volatility in the overall market.

Investors have looked to the Minneapolis retailer as a leader, one of the few that could not only survive but thrive in an Amazon-led  (AMZN) - Get Report e-commerce environment. 

That’s why when the company reported mixed quarterly results, it caught investors off-guard.

Earnings of $1.69 a share beat estimates by 3 cents, but revenue of $23.4 billion missed expectations slightly as sales grew just 1.8% from a year earlier. Further, comparable-store sales growth of just 1.5% missed estimates of 2.1%.

Gross margin widened year-over-year but fell short of consensus expectations, as did operating margin. First-quarter and full-year earnings guidance was mostly in line with expectations but was far from inspiring overwhelming confidence.

Target stock had gotten into a trend, rising big on earnings, consolidating the gains and rising again on earnings a few months later. 

With the shares under pressure ahead of the report and a quarterly result that’s failing to rile up the bulls, Target is worth a closer look.

That’s why Real Money selected Target as its Stock of the Day. Let’s have a look at the charts.

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Trading Target Stock

Daily chart of Target stock.

Daily chart of Target stock.

Regarding the earnings-pop-and-consolidate pattern, I have highlighted that action with blue circles above. But Target stock hasn’t been acting right - an observation that rings true even before the coronavirus-induced volatility crushed equities in mid-February.

Target shares have been under pressure since the first day of trading in 2020, as the stock continues to make a series of lower highs. That’s highlighted by downtrend resistance on the chart (purple line). The shares are down more than 15% so far for the year.

Investors now have the shares sitting right in the middle of two key areas.

Target stock filled its late-February gaps, as it returned toward its prior uptrend mark (blue line). This is not the end-all-be-all mark by any means, but as the share price dances around it, investors can see it still plays some significance.

If the bulls gain some upside traction, let's see whether they can drive Target back up to the 50-day and 100-day moving averages. Reclaiming them puts $122.50 on the table.

Should the shares continue to fall, let's see how the stock handles the 200-day moving average. While this mark was technically breached last week, it’s held up well as support. Below it will put $100 on the table, as well as the August gap-up low near $97.50.

I don’t expect a retest of $87.50 anytime soon, but it’s technically possible if $97.50 fails as support. For now, though, keep it simple. Over $112 puts $118 on the table. Below keeps the 200-day moving average in play.