Kohl's Shares Face Technical Fork in the Road With Earnings

NEW YORK (TheStreet) -- Shares of discount department store Kohl's (KSS) will face a test on Thursday when the company reports earnings.

Since hitting an all-time intraday high of $55.14 on April 6, the stock has fallen about 7%. It fell as much as 11% from the high to $70.90 on April 30. Previously, it had risen 31% from its 200-day simple moving average of $55.14 on Nov. 5 on a pair of strong earnings reports.

The shares are below their 50-day simple moving average of $75.08 with a weekly chart that will shift to negative if the stock should close the week on Friday below its key weekly moving average of $74.06.

Analysts expect Kohl's to report earnings of 57 cents a share for its fiscal first quarter ended in April. Some analysts say that the retailer improved its product mix and increasing same-store sales should push the shares higher. Stern Agee gives Kohl's a buy rating and a price target of $85. The reaction to earnings is thus a tug-of-war between bullish fundamental calls, and potential negative technical charts.

Let's look at the daily and weekly charts for Kohl's and provide the key technical levels at which to buy on weakness and the key technical levels at which to sell on strength.

Investors not familiar with technical analysis should begin with the notion that a price chart for a stock shows a road map of past price performance, which provides guidance for predicting future share-price direction.

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