Before this morning’s earnings report, Kohl’s (KSS) stock had declined in eight of the prior nine trading sessions, falling more than 16% in that span.
But that pullback apparently didn’t lower the bar enough for the retailer, as the shares slumped more than 14% at one point in Wednesday’s premarket session.
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It’s been better since the open, with the shares down just about 3% at last check. The decline comes as Kohl’s reported a disappointing quarter.
Analysts were expecting a profit in the quarter. Instead, the retailer lost $2.49 a share, while revenue declined 7.4% year over year and slightly missed analysts’ expectations. Management’s full-year outlook also missed estimates.
So far, it hasn’t been a good run for retailers. Lowe’s (LOW) is down 5% on the day after reporting earnings, while Abercrombie & Fitch (ANF) is off as well.
Walmart (WMT), Target (TGT) and Home Depot (HD) have also struggled since they reported.
Even with its 7% dividend yield, Kohl’s stock is struggling right now.
Trading Kohl’s Stock on Earnings
Chart courtesy of TrendSpider.com
Kohl’s stock suffered a nasty pre-earnings correction, but its post-earnings action is arguably even more discouraging. The attempt to rally back toward $30 and the ensuing rejection from this area is very disheartening for the bulls.
That’s as the stock tried to regain the 10-day, 50-day and 21-week moving averages, as well as the weekly VWAP measure. Instead, these measures rejected the stock.
At least on the upside, traders have a clearly defined level to keep an eye on, which is $29.50 to $30.
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If Kohl’s stock can regain that area — and thus the measures outlined above — it opens the door to higher prices. Specifically in that case, I would have my eye on the 200-day moving average, currently near $31.25, followed by $35.
On the downside, it’s a little trickier. The post-earnings low is near $26.40. A break below this level and the odds increase that we will retest the $24 to $25 zone.
That area has been big support over the past several quarters and — as we outlined in August — it was the top end of a major trading zone for Kohl’s stock.
Until we have a little more clarity, it’s hard to be a buyer of Kohl’s stock down here, regardless of the dividend.
