Shares of discount retailer TJX are near a very critical level, without a breakout soon the stock could falter.
TJX (TJX) has rebounded nicely off last month's low. At Thursday's peak the stock was up over 4.5% from the January 31 bottom with the help of an impressive uptick in volume. This rally has driven TJX back up to its declining 200-day moving average. If the stock is unable to power through this heavy resistance area soon, a steep pullback could quickly develop.
A few days after the election TJX surged nearly 4% after reporting a very strong third-quarter earnings report. This high-momentum move carried shares well past the 200 day moving average before stalling out near $80. TJX quickly reversed from this area and has been very sluggish since.
The stock spent nearly the entire month of January below its 200-day moving average and began the final day of the month at fresh lows. TJX' rebound during the last day of January confirmed the $73.50 to $71.50 area as a major support zone. If bulls are not able to drive the stock back above the January high soon its likely major support near the May, June, October, November and January lows will be retested once again.
In the near term, TJX investors should keep a close eye on the January highs of $77.20. A failure to take out this key level would indicate the downward sloping 200-day moving average is in control. Once the January highs are cleared TJX has plenty of room to run on the upside. On the downside, a close back below this week's low would indicate an important monthly high could be in place for February.
Of note, TJX is scheduled to report earnings on Feb. 22.
Courtesy of TheStreet.com