Target Is a Hit on Earnings, but Traders Should Aim Very Carefully

Retailer Target TGT reported Wednesday morning that comp sales turned positive in the second quarter, led by an 8.7% growth in digitally originated comp sales. Adjusted earnings per share came in at $2.57, which beat by $0.39. Revenue landed at $25.45 billion, which beat expectations by $240 million.

Let's check out the charts and indicators for some price ... targets ... for the shares.

In this daily bar chart of TGT, below, I can see that prices have corrected lower the past 4 1/2-months. I need to use my imagination to "see" that prices are trading around $166 in the premarket Wednesday. 

This would put TGT well above the declining 50-day moving average line and above the rising 200-day line. The On-Balance-Volume (OBV) line has been steady the past three months or so. The Moving Average Convergence Divergence (MACD) oscillator started to improve in the middle of August and could soon cross above the zero-line if today's strength continues.

In this weekly Japanese candlestick chart of TGT, below, I see a potential price bottom. Prices are back above the 40-week moving average line. The weekly OBV line has declined since March but August could be a turning point. The MACD oscillator is hugging the zero-line but a shift to the upside could begin this week.

In this daily Point and Figure chart of TGT, below, I can see a potential upside price target in the $175 area.

In this weekly Point and Figure chart of TGT, below, I can see that prices reached a downside price target in the $141 area. A trade above $156 could turn this chart more positive.

Bottom line strategy: Buying a stock after a price gap open needs some finesse when it comes to risk. I would wait for a few days of trading to happen before buying, so one can risk below the lows of a few days of trading.

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