One notable example is TJX Cos, Inc. (TJX), which has shown a bounce this week following a successful retest of key moving average support. The strong volume characteristics and the long-term secular uptrend visible on the weekly chart suggest that this could be the onset of a new uptrend phase.
On the daily chart, the significance of the breakout in August is evident. This movement above $135 not only surpassed the previous high from May but was also marked by a substantial gap day following the quarterly earnings report. Although TJX closed lower on that gap day, indicating a lack of buying power post-earnings, the stock managed to pull back to the breakout level and resumed its long-term uptrend into October.
More recently, we observed a pullback to the 50-day moving average earlier this month, which was quickly followed by a new wave of buyers driving the price to a new 52-week high this week. The Relative Strength Index (RSI) remained above the critical level of 40 during the test of the 50-day moving average, signaling robust momentum for this apparel retailer.
Looking back over the last 12 months, the volume characteristics for TJX have been quite favorable. The accumulation-distribution line has been on a steady uptrend since June, confirming that volume has generally supported the cyclical uptrend in price. Additionally, the Chaikin Money Flow (CMF) remains well above the zero level, indicating that TJX is currently in a phase of accumulation, which could further bolster price gains.
The real allure of a stock like TJX lies in the long-term uptrend depicted on the weekly chart. Following a major low in May 2022, this retail stock has seen a consistent and steady rise. Each pullback has found support around the 40-week moving average, with minor setbacks leading to further gains. Price momentum continues to be strong, and the weekly RSI has not dipped below 40 since that May 2022 low.
In terms of risk management, regular tests of the 200-day moving average have been instrumental in identifying potential support during this long-term secular uptrend. Should TJX break below the 50-day moving average in the upcoming weeks, the 200-day moving average could present an excellent opportunity to revisit this long-term winner.
—David Keller, CMT marketmisbehavior.com
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