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Trading Target Stock After Earnings Plunge and Bear Market Hits Retail

Target is getting swamped, as is most of retail. Here's the must-hold support area for the Minneapolis retail giant.

Not long ago, high-quality retailers were a safe haven for investors. I had said these were some of the best names in the market at the time.

My, have times changed, and quickly. Target  (TGT) - Get Target Corporation Report is just the latest example, down about 28% on Wednesday. Walmart  (WMT) - Get Walmart Inc. Report felt something similar with its 11.8% decline on Tuesday, its largest one-day decline in 35 years.

Both management teams cited painful inflation pressures cutting into profit.

Target’s revenue rose 4% year over year but still missed analysts’ estimates. Earnings of $2.16 a share missed estimates and were a bit more than half the year-earlier figure as inflation ate into the bottom line.

It’s no wonder the stock is getting hammered in today’s session. That in turn has thrown the charts for a serious loop.

But still -- there's some potential support to keep an eye on.

Trading Target Stock

Weekly chart of Target stock.

Weekly chart of Target stock.

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On the weekly chart, the action here is discouraging. After all, Target is one of the premier retailers, along with Walmart, Costco  (COST) - Get Costco Wholesale Corporation Report, Home Depot  (HD) - Get Home Depot Inc. (The) Report and others.

Unfortunately, this group has sunk into a bear market, much like what tech and other sectors have felt.

But Target stock particularly is dipping into an interesting area. The shares are testing the monthly VWAP measure and the 61.8% retracement of the range, which is measured from the all-time high down to the March 2020 covid low.

If we could get a bounce going over $168 — today’s high — then it’s possible we see a larger bounce up to $184. That level was the prior 2022 low before today’s action.

On the downside, it would be good if bulls could hold today’s low and the current support areas. But let’s not pretend that this is a good-looking chart.

If support were to fail, it would open the door down to the 200-week moving average near $150.

Noteworthy is that this measure hasn’t been tested in quite some time — even during the covid pullback. You’d have to go back another year from that date, to March 2019, to see the most recent test of this measure.

Below that level and the $125 to $130 area could be on the table.