Target Stock Could Stage Big Bounce in the New Year

The equity is up over 33% year-to-date

Deputy Editor
Dec 21, 2020 at 1:11 PM
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The shares of Target Corporation (NYSE:TGT) are up 0.8% at $171.73 at last check, amid news that the retail giant is offering contactless pickup and at-home delivery services through Dec. 24. TGT has cooled off since its Dec. 1 record high of $181.17, with the 10-day moving average providing a close ceiling this month. However, this pullback has Target stock near a historically bullish trendline, which could serve to push the equity higher in the coming weeks -- extending its 33.8% year-to-date lead. 

More specifically, TGT just came within one standard deviation of its 40-day moving average, after spending a good portion of 2020 above it. According to data from Schaeffer's Senior Quantitative Analyst Rocky White, six similar signals have occurred during the past three years. One month after each signal, Target stock was positive 67% of the time, averaging a return of 4.1%. From its current perch, a move of similar magnitude would put the stock up past $178, nearing its recent record levels. 

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Though a majority of analysts are bullish, there is still room for more optimism, as six of the 18 analysts in coverage still sport a tepid "hold" rating on TGT. Elsewhere, shorts have started to pile on, with short interest up 41% during the most recent reporting period. An unwinding of these bearish bets could give the equity a boost as well. 

Now seems like a decent time to weigh in on Target stock's next move with options. The security's Schaeffer's Volatility Index (SVI) of 29% sits in the low 13th percentile of its annual range. This means the stock is currently sporting attractively priced premiums at the moment. 

 

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