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Stock of interest - Week 19 (2022) – USA – PRICE ACTION

The week beginning Monday, the 9^th May is Week 19 as per ISO numbering convention of the weeks of a year.

Country in focus:

This week we look at the Stocks from USA in S&P500 index.

Stock/ETF in focus:

Specific Stock in focus is Target Corporation (Ticker: NYSE: TGT), in the Discount Stores industry.

Since the beginning of the Ukraine war, the financial markets around the world have been through a roller-coaster ride as geo-political uncertainties are not looking to cease anytime soon. Central banks around the world have started to raise the Interest rates as inflation is taking an upswing.

Under the circumstances, TGT is a safe trade to stock, as the Stock has shown remarkable conformance to consistent Price Action patterns, details later in the blog.

Trade Direction:

BULLISH, Price Action study since beginning of 2019 reveal 93.3% probability of success in a BUY (LONG) trade.

Overview:

Target Corporation operates as a general merchandise retailer in the United States. The company offers food assortments, including perishables, dry grocery, dairy, and frozen items; apparel, accessories, home décor products, electronics, toys, seasonal offerings, food, and other merchandise; and beauty and household essentials. It also provides in-store amenities, such as Target Café, Target Optical, Starbucks, and other food service offerings. The company sells its products through its stores; and digital channels, including Target.com. As of March 09, 2022, the company operated approximately 2,000 stores. Target Corporation was incorporated in 1902 and is headquartered in Minneapolis, Minnesota.

Sector and Industry Details:

Sector:                                  Consumer Defensive

Industry:                               Discount Stores

Full-time employees:         450,000

Fundamentals:

52-week range        184.00 - 268.98

Avg. volume             3,896,888

Market cap               104.424B

PE ratio (TTM)         15.97

EPS (TTM)                 14.10

Earnings date          18 May 2022

Ex-dividend date    17 May 2022

1y target esttimate 278.57

Current trading price:

As of Friday, close of 6^th May 2022, the stock was trading at 225.21.

PRICE ACTION:

The stock reasonably strongly follows price action events for bullish and bearish moves, here are some of the details of its price action behaviour:

• Since 2019, there were 18 BULLISH price action events for this Stock, out of which 14 were winners with average move up of 16.76% and average move down of 4.39% for an average holding time of 54 days;            
• If 100 stocks were bought following those BULLISH price action events, then a trader would have had a Gross Profit of $32,719, Gross Loss of $365, making a Total Net Profit of $32,354;
• In those trades, the Largest Win was $3,950, Largest Loss is $365, the Average profit/trade being $2,157.
• The average Reward-Risk Ratio (RRR) in those trades were about 90:1

Trade Structure:

We would trade the Stock as Debit Spread with Options expiring in 48 days, as follows:

BTC     260 Strike CALL       Expiry: June 24, 2022        10 Units            2.155 Debit

STC     265 Strike CALL       Expiry: June 24, 2022        10 Units            1.565  Credit

---------------------------------------------------------------------------------------------------------

                                                                                                Nett                0.60    Debit

Key trading parameters:

• The trade will cost us 0.60 X 10 X 100 = $600 debit
• Maximum loss: $600, if Stock closes below $260 on June 24, 2022
• Maximum profit: (265 – 260) X 10 X 100 = $5,000, if Stock closes above $265 on June 24, 2022
• Breakeven: 260 + 0.60 = $260.60, if Stock closes at this price on June 24, 2022
• Reward-Risk Ratio (RRR): $5,000: $600 = 8.33:1, approximately

Trade will make maximum profit if the underlying Stock moves up by about 18%. This is an example trade only, and a trader has the option to select lower strike prices of the Options, in which case the trade will cost more and will have a lower RRR but perhaps higher Probability of success. That’s the decision a trader will have to make all the time in each and every such trades.

Charts:

Summary report extract:

Trade Performance (Single Stock/ETF/Index, non-leveraged): 2012-2021:

Histogram:

Latest event candlestick chart:

Further Information about trading applications:

Please visit the following URL for more information on various trading applications from Sapphire Capitals which are designed to deliver high probability trading opportunities for swing trading as well as for intraday trading:

https://www.sapphirecapitals.com/pages/swing-trading-stock-seasonality-strategy/

https://www.sapphirecapitals.com/pages/swing-trading-stock-price-action-strategy/

https://www.sapphirecapitals.com/pages/swing-trading-volume-spike-stock-trading-strategy/

https://www.sapphirecapitals.com/pages/day-trading-intraday-seasonality-trading/

Disclaimer:

Sapphire Private Assets (ABN: 34 613 892 023, trading as Sapphire Capitals) is not a broker or a financial adviser but an education and research organisation; we provide training and tools for traders and DIY fund managers for trading in global financial markets. The contents of the blog have been produced by using technical analysis and trading applications developed by Sapphire Capitals for the Stock and ETF traded worldwide. The contents of this blog are intended for education and research purposes only and is not a recommendation or solicitation to invest in any Stock or ETF.

For more details, please visit www.sapphirecapitals.com/Disclaimer.