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Subscriber e-mail is getting more positive as readers are using some trading techniques in the "Traders Corner" section of OptionInvestor.com and taking some short-term trades from the "market monitor" and having success. One stock that some traders have a question about is a discount retailer TJX Company (NYSE:TJX) that we talked about in the market monitor a couple of day's ago.

TJX Cos. (TJX) - last 6 months

Last week we thought shares of TJX might be attractive for a bullish trade as we had noticed that shares of Wal-Mart (NYSE:WMT) had been acting well relative to other stocks in the Dow Industrials. Subscribers as well made the tie between the theme of discount retailing and shares of TJX were consolidating nicely at the $30 level. Our bullish target was the 50-day MA and that has been achieved this morning. Yesterday's volume was less than impressive and the stock looks to have simple benefited from a "lack of selling." Under recent market condition, traders that may hold the stock at $31 may want to lock in some gains on current strength as volume remains relatively light. Swing traders can snug up a stop just under this morning's low of $32.99 to try and help assure a profit.

We used several tools to try and help traders identify this stock as a potential bullish candidate. Using "fitted retracement" from the 08/04/00 low of $16.06 and fitting 50% retracement at $27.51 (04/11/01) low gave us a range to trade from. Perhaps an institution was supporting the stock at 38.2% retracement and Friday's "window dressing" had a fund manager padding his/her portfolio with some more stock. Today's rally at downward trend and 50-day MA is perhaps a good level for a short-term trader to be selling strength.

We also used our Dow Industrial "hypothetical" portfolio where we imagined a $1,000 investment in each Dow component from September 10th close. When we saw Wal-Mart (NYSE:WMT) moving up the leader board, traders/investors perhaps made the observation that a "discount retailer" was acting strong. That provided the group strength to perhaps bring further attention to TJX.

Jeff Bailey
Senior Market Technician

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