TJX diverging from peers and market

Posted by downtowntrader | 12/30/2009 12:19:00 AM View Comments

Stock Chart Analysis TJX
The TJX Companies, Inc. (Public, NYSE:TJX)

While I am not necessarily bearish, the stock market continues to get extended on the upside and could be close to taking a breather. I've always maintained both a short and long watchlist so that I am not caught off guard by a down move in the markets. In the case the markets do weaken soon, I prefer to look for charts that are already diverging from the markets, rather than attempting to short stocks that have shown strength and are extended.

TJX is a good example of a stock that has not been participating in the markets move higher over the past few weeks. In fact, TJX is trading at two months lows after gapping down below a channel it was trading in. It closed the gap but has failed to get back over its 20 and 50-day moving averages. It is currently trading close to the bottom of the post gap trading range, and could be close to falling out of this range. Possible support area are still pretty far below, and as such, TJX could be presenting a decent risk versus reward trading setup here.

It is important to note that most bearish setups have been failing over the past several months, as the bears continue to get steam rolled. However, the markets have slowly been returning to some semblance of normalcy, and bearish patterns should not be dismissed without thought. The $36 and $38.25 levels are key areas to watch moving forward.

Good Trading,


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