Kohl’s, Ross Stores, TJX Companies No Bargains in Volatility

NEW YORK (TheStreet) -- Consumers looking for bargains during the 2014 holiday shopping season bought discounted brand named apparel, footwear and home goods at Kohl's (KSS), Ross Stores (ROST) and TJX Companies (TJX). Each of these popular stores set all-time intraday highs in late March into early April before losing technical momentum. Here's how to trade this downside volatility.

Investors should continue to study "must see" daily and weekly charts to judge the risk and reward for discount retailers for the remainder of 2015. Chart analysis and key levels at which to buy on weakness of to sell on strength establish prudent active investment strategies.

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.

Here's how to read a daily chart. There are two moving averages to follow; the 50-day simple moving average is in blue while the 200-day simple moving average is in green.

Here's how to read a weekly chart. This chart shows weekly price bars going back to the beginning of 2009 when the current bull market for stocks began. The red line tracks the ups and downs of the key weekly moving average. The green line is the 200-week simple moving average. The red line that oscillates along the bottom of the chart is the momentum reading on a scale of 00.00 to 100.00. A reading below 20.00 is oversold and a reading above 80.00 is overbought.   A technically positive weekly chart occurs when a stock ends a week above its key weekly moving average with the momentum reading rising above 20.00.

A technically negative weekly chart occurs when a stock ends a week below its key weekly moving average with the momentum reading declining below 80.00.

Here's the daily chart for Kohl's.


Courtesy of MetaStock Xenith

Kohl's had a close of $65.73 on Tuesday and holds onto a gain of 7.7% year to date and is down 17% from its all-time intraday high of $79.60 set on April 6. The stock is still up 13% from its Jan. 20 low of $58.00. The stock had a failed upside test of its 50-day simple moving average on May 11 when the average was $75.08. From there the stock plunged to as low as $64.17 on May 15. The stock is below its 50-day simple moving average of $72.82 and above its 200-day simple moving average of $64.42.

Here's the weekly chart for Kohl's.


Courtesy of MetaStock Xenith

The weekly chart for Kohl's is negative with the stock below its key weekly moving average of $69.17 with a projected momentum reading of 28.33 down from 37.30 from May 29. The 200-week simple moving average is the long-term " reversion to the mean" at $53.61.

Investors looking to buy Kohl's should place a good till canceled limit order to purchase the stock if it drops to $63.08, which is a key level on technical charts until the end of June.

Investors looking to book profits should place a good till canceled limit order to sell the stock if it rises to $69.92, which is a key level on technical charts until the end of June.

Back on April 10 we indicated that a price gap below $75.44 would indicate risk for a potential correction for the stock and this break occurred on April 27.

Here's the daily chart for Ross Stores.


Courtesy of MetaStock Xenith

Ross Stores had a close of $96.98 on Tuesday for a gain of 2.9% year to date, but the stock is 11% below its all-time intraday high of $108.91 set on March 24. The stock has been below its 50-day simple moving average since April 24. The stock is now above its 200-day simple moving average of $90.88 and below its 50-day simple moving average of $101.94.

Here's the weekly chart for Ross Stores.


Courtesy of MetaStock Xenith

The weekly chart for Ross Stores is negative with the stock below its key weekly moving average of $99.51. The stock's projected momentum reading of 28.60 down from 38.06 on May 29. The 200-week simple moving average is the long-term "reversion to the mean" at $68.00.

Investors looking to buy Ross Stores should place a good till canceled limit order to purchase the stock if it drops to $84.39, which is a key level on technical charts until the end of the year.

Investors looking to book profits should place a good till canceled limit order to sell the stock if it rises to $101.78, which is a key level on technical charts until the end of June.

Back on April 10 we indicated that if the stock fell below $101.78 there's risk for a potential correction.

Here's the daily chart for TJX Companies.


Courtesy of MetaStock Xenith

TJX Companies had a close of $64.89 on Tuesday for a loss of 5.4% year to date and the stock is 8.6% below its all-time intraday high of $71.03 set on March 30. The stock is on the cusp of its 200-day simple moving average of $64.98 and below its 50-day simple moving average of $67.10.

Here's the weekly chart for TJX Companies.


Courtesy of MetaStock Xenith

The weekly chart for TJX Companies is negative with the stock below its key weekly moving average of $66.16, as the stock's projected momentum reading of 33.01 down from 37.19 on May 29. The 200-week simple moving average is the "reversion to the mean" now at $50.58.

Investors looking to buy TJX Companies should place a good till canceled limit order to purchase the stock if it drops to $61.46, which is a key level on technical charts until the end of the year.

Investors looking to book profits should place a good till canceled limit order to sell the stock if it rises to $73.27, which is a key level on technical charts until the end of June.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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