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Mish's Daily: A Kohl’s Adventure in 4 Timelines

October 6, 2015

By Mish Schneider

Expect Great Things

-Kohl’s Slogan

Tonight, I decided to write something completely different. My inspiration comes from the incredible deal I got buying Vera Wang Bath Towels. My impetus is to relay one of my favorite stories-How to Turn from Savvy Consumer into a Profitable Stock Trader!

First Timeline-Why I Shop at Kohl’s

Kohl’s (KSS) is America’s largest department store chain by the number of stores as of February 2013, surpassing its biggest competitor, J.C. Penney.

Kohl’s is the only individual store I have a credit card with (Honestly, Neiman Marcus also, but not nearly as interesting a story!) Let’s face it-if I want to look like a million bucks, it’s all Neiman’s. But, for deals on home goods, pajamas, appliances and tchotchkes, it’s all Kohl’s!

I purchased a full set of towels plus a felt hat for winter. My receipt, after sale discounts and coupon savings, said I spent $102 and saved $160!

“Such a deal”, I thought to myself. “What do the charts on this stock look like?” I asked myself.

Daily Chart KSS

KSS price peaked on April 6th with a high of 79.60. Since then, it followed the logical path of deteriorating phases trading currently in a bearish one.

Last Friday, it printed a low of 44.04 and closed on the intraday highs with better than average daily volume but nothing to write home about as far as an expanded trading range. (Read more on the 5 Criteria for a Reversal Pattern here.)

As of the end of Tuesday’s session, KSS closed red. The fast moving average is just overhead at about 46.90.

Weekly Chart KSS

Under all major weekly moving averages, it is holding support from the late January 2013 lows. The Phase is Distribution. Overhead, 52.00 is major resistance which can also serve as a magnet in the world of Law of Attraction, should KSS begin to move higher.

Monthly Chart-KSS

Broke a 2-year bullish cycle which makes sense considering the 2-year Bull Run in the overall market from 2013-2015 has also ended. Again, the historical support at 40.65 up to 41.35 is palpable with the only exception occurring in 2008-2009. No surprises there.

Interestingly, the overhead resistance is-you guessed it-52.00 on the monthly charts as well.

Is There a Trade?

It’s all about Timeframe. Since the question of how much can you make versus the risk is tantamount, 2 considerations:

First, the earnings report coming up on November 12th before the market opens. The consensus EPS forecast for the quarter is $0.75. That’s far enough away to consider a swing trade should it clear 47, with the caveat that an overall market sell-off is sure to drag this further down as well. Otherwise, reasonable to think this could see a move up to 50.00, especially if the market holds up.

Second, the way that I’ve been taught is that if the risk/reward is only 1:1-the trade is not good for more than a day to miniswing trade. You decide.

With the Weekly and Monthly Charts telling us that the broader trend has broken, only unless KSS clears back over those key moving averages, can we expect more down the road, or as they say, “Great Things!”

But that won’t stop me from shopping there!

S&P 500 (SPY) 200.04 the 50 DMA. 195 next big underlying support

Russell 2000 (IWM) 114 hefty resistance, 110-111 support

Dow (DIA) September 17th high at 169.44 resistance. 165 some support. Closed right on the 50 DMA

Nasdaq (QQQ) Unless this clears 106, for now looks like rally is tired

Volatility Index (VIX) With a strong upward sloping 50 DMA as support, another reason to think rally long in the tooth

XLF (Financials) As far as I can see, still consolidating and couldn’t get through 23.20-pivotal

KRE (Regional Banks) Sloppy chart but nice move to the 200 DMA if sticks. If not, under 40.50 trouble

SMH (Semiconductors) Closest to the 9/17 high of 51.88. Over the 50 DMA which is now support at 50.00

IYT (Transportation) A perfect example of piercing the 50 DMA but closing beneath it. The following up with an inside day. Has one more chance or under 141 trouble

IBB (Biotechnology) Closed under the fast moving average. Once again looking at 310 as pivotal

XRT (Retail) 46.00 resistance with 44.50 support to hold

IYR (Real Estate) Rallied just beyond resistance then retreated. Has to hold the 50 DMA at 72.48

ITB (US Home Construction) Back under the 200 DMA with 26.70 minor support to hold

GLD (Gold Trust) Doji day and still want to see this over 110 with gusto

SLV (Silver) Stopped at the 200 DMA and now must hold 14.70

GDX (Gold Miners) Big 3 day move higher. Buying dips makes sense here

USO (US Oil Fund) Major consolidation reconciled to the upside. 14.75 big underlying support with 16 next hurdle

OIH (Oil Services) Dips look like good buy opportunities now

XLE (Energy) Confirmed recovery phase first time since May

XOP (Oil and Gas Exploration) Strong move over the 50 DMA. Been looking for commodities to bottom-seems that they actually may have

TAN (Guggenheim Solar Energy) Stopped right under the 50 DMA. A bit overbought on daily chart at this point

TLT (iShares 20+ Year Treasuries) Held the 50 DMA so for now, looks better. 125 huge resistance to clear

UUP (Dollar Bull) 25.00 resistance. 24.60 support

EWG (Germany) Cluster bottom possibly if holds 25.02

EWI (Italy) Missed writing about the bottom here and now, it is in an unconfirmed bull phase

FXI (China Large Cap Fund) Back to an unconfirmed bear phase

CORN (Corn) Over 24.00 gets real interesting

DBA (PwrShs DB Ag Fd) Cleared the 50 DMA but needs to confirm that

DBC (DB Commodity Index) Confirmed phase change to recovery

SGG (Sugar) Healthy digestion

JO (Coffee) Inside day under the 100 DMA