TJX Offers Quality Items at a Discount With Chart Positives

The TJX Companies, Inc. (TJX) is the parent of discount retailers TJ Maxx, Home Goods and Marshalls. The stock has been tracking the 200-day simple moving average higher since Jan. 18, and its weekly chart has been positive since the week of Jan. 11. The stock closed Monday, Feb. 25, at $49.40, up 10.4% so far in 2019 and up 19.1% since trading as low as $41.49 on Dec. 24. The stock is also in correction territory at 12.6% below its all-time intraday high of $56.64 set on Oct. 1.

TJX reports earnings before the opening bell on Wednesday, Feb. 27, and analysts expect the retailer of off-priced apparel and household goods to post earnings per share of 68 cents. The stock is not cheap, as its P/E ratio is 20.43 with a dividend yield of 1.55%. Wall Street expects a year-over-year decline in earnings, but revenue should be higher. Despite this caution, the retailer has beaten earnings per share estimates in four consecutive quarters. Foot traffic is important, as the bargains are found in stores and not online.

The daily chart for TJX Companies 

The daily chart shows that TJX stock declined 26.7% from its all-time intraday high of $56.64 set on Oct. 1 to its Dec. 24 low of $41.49. The stock is consolidating this bear market decline with a gain of 19.1% from the low. Note how the stock has been riding the 200-day simple moving average higher since Jan. 18, with the average now at $49.54.

The close of $44.74 on Dec. 31 was the input to my proprietary analytics. This resulted in my semiannual value level at $44.84, my quarterly pivot at $47.90 and my annual risky level at $56.51. The close of $49.73 on Jan. 31 was also input to my analytics, resulting in my February risky level at $56.00. My weekly risky level is $53.89.

The weekly chart for TJX Companies

The weekly chart for TJX has been positive since the week of Jan. 11, with the stock above its five-week modified moving average of $49.04. The stock is also well above its 200-week simple moving average, or "reversion to the mean," at $39.79, last tested during the week of Nov. 17, 2017, when the average was $34.74. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 75.90 this week, up from 66.43 on Feb. 22.

Trading Strategy: Buy TJX shares on weakness to my quarterly pivot at $47.90 and add to positions on weakness to my semiannual value level at $44.84. Reduce holdings on strength to my weekly and annual risky levels at $53.89 and $56.51, respectively.

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