Department store Kohl’s Corporation (KSS) offers brand apparel, shoes, accessories, and home and beauty products. The stock has had a strong performance so far in 2018. Shares of Kohl’s closed Friday, Aug. 17, at $76.44, up 41% year to date and 45.5% above the 2018 low of $52.53 set on Jan. 4. The stock is 4.4% below its all-time intraday high of $79.92 set on June 12.

The daily chart below shows a potential double top following the Aug. 14 high of $79.24. The weekly chart is positive, and the stock tested and held its quarterly value level of $69.37 between July 12 and July 16.

Analysts expect Kohls to post earnings per share of $1.65 to $1.68 when the company reports earnings before the opening bell on Tuesday, Aug. 21. The retailer has had the ability to raise prices recently, which should help the bottom line. Kohl’s has expanded its brick-and-mortar relationship with Amazon.com, Inc. (AMZN) to 103 locations from 82 as a place accepting Amazon returns. (See also: Mall Anchors Riding Bullish Wave Into Earnings.)

The daily chart for Kohl’s

Daily technical chart showing the performance of Kohl's Corporation (KSS) stock Courtesy of MetaStock Xenith

The daily chart shows that shares of Kohl’s have been above a “golden cross” since Sept. 25, 2017, when the stock closed at $40.97. A “golden cross” occurs when the 50-day simple moving average rises above the 200-day simple moving average and indicates that higher prices lie ahead. This bullish pattern was a reason to be long the stock. The stock is above its 50-day and 200-day simple moving averages of $73.66 and $62.82, respectively. The three horizontal lines are my quarterly value level of $69.37, my semiannual value level of $57.83 and my annual value level of $50.50.

The weekly chart for Kohl’s

Weekly technical chart showing the performance of Kohl's Corporation (KSS) stockCourtesy of MetaStock Xenith

The weekly chart for Kohl’s is positive, with the stock above its five-week modified moving average of $73.07. The stock is well above its 200-week simple moving average, or its “reversion to the mean,” now at $52.13. Buying the stock on weakness to the “reversion to the mean” is a prudent strategy for the long term. The 12 x 3 x 3 weekly slow stochastic reading ended last week at 68.61, up from 66.63 on Aug. 10.

Given these charts and analysis, my trading strategy is to buy Kohl’s shares on weakness to my quarterly, semiannual and annual value levels at $69.37, $57.83 and $50.50, respectively, and to reduce holdings on strength to my monthly risky level at $85.39. (For more, see: Why Kohl’s Is Back From the Brink.)

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