My process involves regularly scanning for stocks achieving new three-month highs. Over the years, this technique has helped me to identify names that are just emerging from a consolidation phase, and allowed me to follow those trends as the initial breakouts lead to much further gains. This week, I’ve noticed a number of old school retail stocks appearing on the list. One such name, TJX Cos, Inc. (TJX) , is bouncing this week after a successful retest of key moving average support. Given the strong volume characteristics, and the long-term secular uptrend on the weekly chart, this could be just the beginning of a new uptrend phase. On the daily chart, we can see the importance of the breakout in August. This move above $135 cleared the previous high from May, and was punctuated by a big gap day after the quarterly earnings report. TJX closed lower on that gap day, implying a lack of buying power post-earnings. But after pulling back to the breakout level, the stock resumed its long-term uptrend into October. More recently, we noted a pullback to the 50-day moving average earlier this month, which was followed soon after by a new wave of buyers pushing the price to a new 52-week high this week. The RSI remained above the important level of 40 during that test of the 50-day moving average, which indicates overall strong momentum for this apparel retailer. Zooming into the last 12 months, we can observe that the volume characteristics are quite favorable. The accumulation-distribution line has been in a steady uptrend since June, confirming that volume has been overall supportive of the cyclical uptrend in price. The Chaikin Money Flow (CMF) remains safely above the zero level, indicating that TJX remains in a period of accumulation, which could provide further support to additional price gains. With a stock like TJX, the real magic is in the long-term uptrend illustrated on the weekly chart. After a major low in May 2022, this retail name has experienced a steady and persistent advance. Pullbacks have all found support around the 40-week moving average, with each minor setback leading to further gains. Price momentum remains strong, and the weekly RSI has not been below 40 since that May 2022 low. In terms of risk management, the regular tests of the 200-day moving average have helped identify potential support during this long-term secular uptrend phase. If TJX would break below the 50-day moving average in the coming weeks, we’d consider the 200-day moving average as a fantastic opportunity to revisit this long-term winner. —David Keller, CMT marketmisbehavior.com DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
