Department store Kohl's Corporation (KSS) offers brand-named apparel, shoes, accessories, and home and beauty products at affordable prices. The stock closed Thursday, Feb. 28, at $67.53, up 1.8% so far in 2019 and up 15.1% since trading as low as $58.67 on Dec. 24. The stock is in correction territory at 18.9% below its all-time intraday high of $83.28 set on Nov. 12. The retailer reports earnings before the opening bell on Tuesday, March 5, and this morning, the stock reached my risky level for March at $69.44, which makes the 200-day simple moving average the next target at $71.48.
The stock gapped lower on poor holiday guidance when the company reported earnings on Nov. 20. In November, the outlook for the holiday season was cautious, but now the actual results are expected to be positive. Wall Street expects improved sales from Kohl's for the quarter ended in January. The bulls say that Kohl's increased its e-commerce sales and had initiatives to increase foot traffic. Forward guidance will thus be the focus.
There is a chance for volatility in Kohl's shares given the stock has tested my monthly risky level at $69.44. The stock is cheap with a P/E ratio of 12.26 and dividend yield of 3.79%, according to Macrotrends. Analysts expect Kohl's to post earnings per share of $2.17 when it reports results on Tuesday.
The daily chart for Kohl's
The daily chart shows that Kohl's stock declined by 29.5% from its all-time intraday high of $83.28 set on Nov. 12 to its Dec. 24 low of $58.67. This bear market is being consolidated so far in 2019.
The close of $66.34 on Dec. 31 was the major input to my proprietary analytics and resulted in semiannual and annual value levels at $55.45 and $49.19, respectively, with my quarterly pivot at $67.06, which has been a magnet since Jan. 2. The close of $67.53 on Feb. 28 resulted in my monthly risky level for March at $69.44, which was tested on Friday, March 1.
The weekly chart for Kohl's
The weekly chart for Kohl's is positive, with the stock above its five-week modified moving average at $66.74. The stock is well above its 200-week simple moving average, or its "reversion to the mean," now at $52.83, last crossed at $50.29 during the week of Dec. 15, 2017. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 47.74 this week, up from 41.97 on Feb. 22.
Trading Strategy: Buy Kohl's shares on weakness to my quarterly pivot at $67.06 and reduce holdings on strength to the 200-day simple moving average of $71.48. My monthly pivot for March has been tested already and should be a magnet.
Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.