Kohl's Corporation (KSS) is a stand-alone department store that has been hurt by closures due to COVID-19. The retailer offers brand-named apparel, shoes, accessories, and home and beauty products at affordable prices.

Kohl's has a relationship with Amazon.com, Inc. (AMZN), as consumers who buy online using Amazon can drop off returns at Kohl's stores. With most consumers locked down at home due to the pandemic, the stock has plunged, but it is recovering in April.

Kohl's stock closed Wednesday, April 8, at $17.52, down 65.6% year to date and in bear market territory at 76.9% below its 52-week high of $75.91 set on April 23, 2019. The stock is also in bull market territory at 60.9% above its April 3 low of $10.89.

The stock is extremely cheap fundamentally, with a P/E multiple of 3.48 and a dividend yield of 16.56%, according to Macrotrends. Odds are that this dividend will be cut significantly or even suspended until stores can be open again. 

The daily chart for Kohl's 

Daily chart showing the share price performance of Kohl's Corporation (KSS)
Refinitiv XENITH

The daily chart for Kohl's shows that the stock has been below a "death cross" since on Dec. 24, 2018, when the 50-day simple moving average fell below the 200-day simple moving average to indicate that lower prices would follow. The trading strategy when this occurs is to sell strength to the 200-day simple moving average, and the chart clearly shows several opportunities to sell at $70.00 and above between Jan. 9, 2019, and May 1, 2019. The 200-day simple moving average was also tested at $56.82 on Nov. 14, 2019, which was another opportunity to reduce holdings.

The price gap lower on May 21, 2019, was caused by a negative reaction to earnings. Another price gap lower on Nov. 19 was another negative reaction to earnings. The stock began 2020 below its 50-day simple moving average at $51.19 and plunged to its April 3 low of $10.89. Kohl's stock currently trades below its monthly risky level at $25.52 and its quarterly risky level at $36.69.

The weekly chart for Kohl’s

Weekly chart showing the share price performance of Kohl's Corporation (KSS)
Refinitiv XENITH

The weekly chart for Kohl's is negative but oversold, with the stock below its five-week modified moving average at $25.67. The stock is also below its 200-week simple moving average, or "reversion to the mean," at $52.66. The 12 x 3 x 3 weekly slow stochastic reading is at 10.74, up from 9.44 on April 3. This made the stock "too cheap to ignore" as April began, which was a buy signal. 

Trading strategy: I do not have a value level. My call is to sell Kohl's shares on strength to the monthly and quarterly risky levels at $25.52 and $36.69, respectively.

How to use my value levels and risky levels: The stock's closing price on Dec. 31, 2019, was an input to my proprietary analytics. Semiannual and annual levels remain on the charts. Each calculation uses the last nine closes in these time horizons.

Second quarter 2020 and monthly levels for April were established based upon the closing price on March 31. New weekly levels are calculated after the end of each week, and new quarterly levels occur at the end of each quarter. Semiannual levels are updated at mid-year, while annual levels are in play all year long.

My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility, investors should buy shares on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before their time horizon expires.

How to use 12 x 3 x 3 weekly slow stochastic readings: My choice of using 12 x 3 x 3 weekly slow stochastic readings was based upon backtesting many methods of reading share-price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years.

The stochastic reading covers the last 12 weeks of highs, lows, and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading, and I found that the slow reading worked the best.

The stochastic reading scales between 00.00 and 100.00, with readings above 80.00 considered overbought and readings below 20.00 considered oversold. A reading above 90.00 is considered an "inflating parabolic bubble" formation, which is typically followed by a decline of 10% to 20% over the next three to five months. A reading below 10.00 is considered "too cheap to ignore," which is typically followed by gains of 10% to 20% over the next three to five months.

Disclosure: The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.