Kohl’s stock made a decisive jump above its 20- and 50-day simple moving averages (SMA) on Wednesday, but a sustained rebound is far from clear. The US retailer reported a surprise profit for the first fiscal quarter, but the stock has already skidded below its opening price.
The momentum indicators have been pulled higher by today’s price move and the short-term bias is in the process of shifting from negative to positive, but this can only be confirmed if the stock closes around its 50-day SMA and doesn’t completely fill the gap up.
At the moment, the near-term risks remain tilted to the downside as the stochastic oscillator has yet to recover towards the 50 neutral area, while the MACD has only marginally increased its distance above its red signal line and is still in the negative region.
If the price is able to close above the 50-day SMA, the upside momentum could then strengthen enough to challenge the April peak of 24.52. Higher up, the proven support level of 26 could act as resistance before the 200-day SMA comes within range at just below the 27 handle.
However, should the spike higher turn out to be just a knee-jerk reaction to the earnings beat, the stock could drop back below the 20-day SMA and revisit last week’s 2½-year low of 18.41. A subsequent resumption of the medium- and long-term downtrend could push the price as low as the 261.8% Fibonacci extension of the March-April upleg at 14.41 in the next downward phase.
In brief, Kohl’s stock has a mountain to climb, not just in avoiding turning today’s gap higher into a red candle but to also stage a convincing rebound by surpassing the February top of 35.47. Otherwise, the bearish forces will continue to dominate.
Kohl’s stock made a decisive jump above its 20- and 50-day simple moving averages (SMA) on Wednesday, but a sustained rebound is far from clear. The US retailer reported a surprise profit for the first fiscal quarter, but the stock has already skidded below its opening price.
The momentum indicators have been pulled higher by today’s price move and the short-term bias is in the process of shifting from negative to positive, but this can only be confirmed if the stock closes around its 50-day SMA and doesn’t completely fill the gap up.
At the moment, the near-term risks remain tilted to the downside as the stochastic oscillator has yet to recover towards the 50 neutral area, while the MACD has only marginally increased its distance above its red signal line and is still in the negative region.
If the price is able to close above the 50-day SMA, the upside momentum could then strengthen enough to challenge the April peak of 24.52. Higher up, the proven support level of 26 could act as resistance before the 200-day SMA comes within range at just below the 27 handle.
However, should the spike higher turn out to be just a knee-jerk reaction to the earnings beat, the stock could drop back below the 20-day SMA and revisit last week’s 2½-year low of 18.41. A subsequent resumption of the medium- and long-term downtrend could push the price as low as the 261.8% Fibonacci extension of the March-April upleg at 14.41 in the next downward phase.
In brief, Kohl’s stock has a mountain to climb, not just in avoiding turning today’s gap higher into a red candle but to also stage a convincing rebound by surpassing the February top of 35.47. Otherwise, the bearish forces will continue to dominate.
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