At the same time other major retail names are struggling to compete, Target is surging on the heels of third-quarter earnings. Target is up more than 12% Wednesday, boosted by earnings of $1.36 a share and a higher full-year outlook. That profit number came in well ahead of the $1.19 that analysts were hoping for, on average.
That's the third straight price jump following quarterly earnings for Target - and the second straight double-digit move.
It puts Target up more than 93.9% year to date, crushing the 22.56% return of the S&P 500 Retailing Index (of which Target is a member) over the same period.
Now, there's reason to believe that Target could hit higher ground in the final stretch of 2019. To figure out how to trade it, we're turning to the chart for a technical look.
At a glance, it's hard to miss the clear-cut uptrend that's defined Target's price action all year long. Since the beginning of 2019, Target has traded in a tight range, testing trendline support only twice - once in May and again in August - along the way.
Now, Wednesday's earnings breakout is pushing shares of Target through the top of their trend channel for the first time this year. And it's sending shares to new all-time highs in the process.
While the move through the top of Target's trend channel is notable, we're likely to see this stock re-enter the channel in the sessions ahead. That's not a bad thing by any means - re-entering the trend channel that's been in play this year keeps Target on a more sustainable track to continue climbing.
That's confirmed in part by relative strength, the indicator at the bottom of Target's price chart. Relative strength has increased parabolically this year, as relatively flat periods where Target has kept pace with the broader market have given way to fundamentals-driven gaps higher.
On the last two major earnings-fueled gaps higher this year, Target's relative strength was mainly sideways. That means that shares managed to keep pace with the broader market rather than mean-revert following the abrupt jump in price. That bodes well for Target's ability to hold the gap higher here.
The most likely scenario right now is that Target essentially "rides" the top of its trend channel higher for the remainder of 2019. And that would be a very good thing for Target bulls.
From a risk management standpoint, the level to keep an eye on is the 50-day moving average. Each of the violations of the 50-day in 2019 have resulted in a test of trendline support, currently around the $95 level. Simply put, if Target breaks the 50-day, it makes sense to exit the trade and wait for a support test before re-entering.
Meanwhile, the bulls are clearly in control of this retail leader right now.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.