Target - Buy the Dip? Here's What the Charts Say Now

Online sales are soaring at Target but investors are worried about profits. Here's what the chart looks like now for the stock.
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Shares of Target  (TGT) - Get Report were rocked at the open on Thursday after a profit warning from the retailer.

Target CEO Brian Cornell said, “While this crisis will certainly put near-term pressure on our profitability, that pressure is far outweighed by doing right by our team and our guests.”

However, sellers seemed to be ignoring a pretty big part of the company’s overall statement, which was that online sales roared higher. So far, comp-stores sales for the quarter have risen 7% and digital channels have seen more than 100% growth in the current quarter.

Apparently it’s not just Amazon.com  (AMZN) - Get Report that’s dominating online sales.

Target did acknowledge that there’s been a shift to lower margin products over high-margin merchandise, leading to the profit impact. The initial reaction by investors was quite bearish, with Target stock opening lower by 5.75%. 

Now down just 1.5% though and investors seem to be warming up to some of the positives here.

Let’s take a closer look at the stock.

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Trading Target Stock

Daily chart of Target stock.

Daily chart of Target stock.

Above is an 18-month daily chart of Target stock, highlighting a few key areas and moving averages. Investors can clearly see how well the stock held $90 in March. Not only was the market under tremendous pressure at the time, but Target was as well after reporting earnings.

Shares eventually popped and rallied higher, reclaiming several key moving averages in the process.

However, TGT shares gapped back below these measures on Thursday following the company’s latest update. Unlike most retailers right now, Target, Walmart  (WMT) - Get Report and others seem as though they will make it through this pandemic in relatively okay shape.

It’s encouraging to see investors bidding up shares of Target now, although it would be much more inspiring if the stock can turn positive and reclaim the 200-day moving average. Above the 200-day puts $115 in play.

If Target instead takes out Thursday’s low and falls below $100, look for a possible retest of $90. Below that and it could fill the August gap in the mid-$80s.

Here’s the bottom line: Keep an eye on the 200-day moving average on the upside and $100 on the downside.