Since the Nov. 9 low, shares of Target (TGT) have been on an absolute tear.
Following last Friday's slight gain, the stock had finished in the red only one time over the past 12 sessions. During this powerful streak, which began from a major support zone near $66, Target stock surged over 19%. Late last week, the stock began to challenge a very heavy resistance area. For patient bulls, a healthy consolidation may soon be on the way and, with it, lower entry levels.
A little over a week after the Nov. 9 spike, Target left behind a huge earnings-inspired breakout gap. Target ramped over 6% on Nov. 16 as upside volume jumped to its heaviest level in well over a year.
Since that powerful move, though, further upside has been fairly limited. Target has been bumping up against a heavy supply zone just as shares have returned to overbought territory. Upside momentum also appears to be waning above the $78 area. A pullback and consolidation appears to be on the way.
In the near term, further upside for Target may be difficult. Patient bulls should keep a close eye on the $79 to $80 area. This key resistance zone includes the April low as well as the extremely damaging May 11 collapse. Target left behind a huge downside gap that morning, sparking an ugly down leg that eventually drove shares to new 52-week lows. A healthy pullback from this zone is likely before the $80 area can be convincingly taken out. A drift back down to the $77 to $76 area would retest a very solid support zone. After a brief rest here, Target will be set up well for more upside.
Also of note, Target sports a very high short interest ratio of 11. This added fuel could limit the depth of a pullback considerably.