Stock Picks: Target and Sealed Air Corporation

The S&P 500 (SPX) went as high as 2,801.90 on March 13 before bears stepped in to defend 2,800 resistance. As expected, failure to go above this level inspired a round of profit taking. The good news, however, is that bulls seem prepared to make a stand at 2,750 support. Volume surged to 3.456 billion on March 16 indicating the presence of buyers at 2,750. If bulls create a higher low, they might use it to breach 2,800.

As bulls prepare for a push, let’s look at stocks that are near firm support levels.

TGT – Target Corporation

Target Corporation is an American S&P 500 general merchandise retailer. Incorporated in 1902, the company now has 1,834 stores across the United States. These stores strive to offer low prices on food assortments, including perishables, dry grocery, dairy and frozen items, as well as in-store amenities such as Target Cafe, Target Photo, and Target Optical. They own exclusive brands such as C9 by Champion, Hand Made Modern, Mossimo, DENIZEN from Levi’s as well as brands like Archer Farms, Market Pantry, Sutton & Dodge, Art Class, Merona, Threshold, and Room Essentials, among others.

TGT lost its bullish steam in April 2016 when it generated a lower high of 84.14. It went as low as 65.50 in May 2016 before bulls entered the buying picture, and pushed the price up to 79.33 in November 2016. Unfortunately for buyers at this level, bears repelled the advance, and sent the stock into a freefall. TGT broke 68 support in January 2017 and from that point, the stock created consecutive lower highs and lower lows until it bottomed out at 48.56 in June 2017. The market bounced, which opened up an opportunity to buy the breakout.

Technical analysis show that TGT has taken out resistance of 68 in January 2018. More importantly, the breakout has effectively reverse the stock’s trend. While it soared to 78.70 in the same month, TGT pulled back after flashing overbought signals. The dip has forced the stock to retreat to support of 68, which is a great chance for you to buy shares near the breakout point.

The strategy is to buy as close to 68 as possible. If bulls preserve this level, the market would likely use it to sustain its ascent to our target of 86. The process may take six months.

Weekly TGT Chart

Monthly TGT Chart

As of this writing, the Target Corporation stock is trading at 70.41.

Summary of Strategy

Buy: As close to 68 as possible.

Target: 86

Stop: close below 66.25

SEE – Sealed Air Corporation

Sealed Air Corporation is an American packaging company engaged in food safety and security, facility hygiene, and product protection. Founded in 1960, the company designs and manufactures packaging solutions within three operational segments: Food Care, Product Care, and Corporate. Well known for its brands: Cryovac for food packaging and Bubble Wrap for cushioning, Sealed Air Corporation has won prestigious recognitions throughout the years, including Fortune’s Most Admired Company of 2018.

SEE launched its bull run when it took out resistance of 24 in July 2013. The stock generated a series of higher highs and higher lows until it became toppish at 55.84 in August 2015. Those who rode the uptrend took the chance to lock their gains. As a result, SEE plunged to 38.02 in January 2016 before bottom pickers ignited a rally that saw the market bounce to as high as 52.83 in April 2016. At this point, the market shifted into sideways consolidation, which offers you an opportunity to trade the range.

Technical analysis reveal that SEE is range trading between 42.5 and 52.5. While the stock recently went below 42.5 support, the move appears to be a bear trap as SEE has managed to recover the support level. The false breakdown can be the catalyst that sends the stock to the top end of the range.

The strategy is buy as close to 42.5 as possible. If bulls continue to defend this support, they will use it to climb to our target of 52.5. The process may take more than three months.

Weekly SEE Chart

Monthly SEE Chart

As of this writing, the Sealed Air Corporation stock is trading at 44.21.

Summary of Strategy

Buy: 42.5

Target: 52.5

Stop: 40.75


Featured image courtesy of Shutterstock.

Kiril is a CFA Charterholder and financial professional with 5+ years of experience in financial writing, analysis and product ownership. He has passed all three CFA exams on first attempt and has a bachelor's degree with a specialty in finance. Kiril’s current focus is on cryptocurrencies and funds, as he does his own crypto research and is a Product Manager at Mitre Media. He also has his personal website, where he teaches people about the basics of investing. His ultimate goal is to help people with limited knowledge of finance and investments to create investment portfolios easily, and in line with their unique circumstances.