Shares of Kohl's (KSS) have been hit hard this year along with the rest of the broadline retailers, but a recent period of price consolidation and supportive technical indications suggest a speculative short-term trading opportunity.
The stock is down 20% year-to-date but 39% from its high for the year. The decline off that high has been precipitous, initiated when it broke below its 50-day moving average in April and then accelerating in July after the 50-day average crossed below the 200-day average. Over the last two months, shares have been attempting to stabilize and consolidate below resistance in the $48 area, and technical indications are improving. The relative strength index, a measure of price momentum has moved out of its oversold sold zone and above its 21-period signal line, and the money flow index, a volume-weighted relative strength measure, has also moved out of an oversold condition and above its signal average. These are coordinated indications of positive price and money flow momentum.
The stock price closed above its 50-day moving average for the first time in seven months on Friday and above the downtrend line drawn off the highs of the year in Monday's session. Daily moving average convergence/divergence is overlaid on a histogram of the weekly indicator and is tracking higher on both timeframes. The relative strength index moved out of an oversold condition in October and is currently above its centerline. Chaikin money flow moved into positive territory during this consolidation period, reflecting buying interest in the stock at current levels.
The stock is a speculative trading opportunity after an upper candle close above $48 resistance. This is a short-term play and a quick profit or loss is the strategy.