Target tops Q3 expectations, introduces 'low-price promise'

Looking ahead, Target is "planning conservatively" and is taking a cautious approach to the current economic situation. As for the holiday shopping season, Target is also remaining conservative, only noting that it will be a "highly promotional" season. Does that mean more silly commercials?

There are two revelations from the announcement that I would like to analyze. The first is that the company will be adding fresh foods and groceries to its non-Super Target stores. The retailer believes that this will help increase store traffic. I'm not so sure that this will be the case, but I could see the move (called P-Fresh) upping the per-customer sales, as fresh food could be something that people see in the store and then decide to purchase. This move could increase the amount of sales for Target.

The other initiative that I find interesting is a "low-price promise" that should combat the idea that other discount retailer's prices are better than Target's. The company will launch a broadcast campaign and will test the low-price promise in Denver and Orlando. This could be a huge move, as it would give consumers the knowledge that they are getting the absolute lowest price possible.

Technically, TGT has had a good calendar year, but it is facing overhead resistance and may need some help. The good news is that the stock is advancing along the support of its 10-week moving average, as it has throughout a good part of the past year. With Tuesday's news catapulting the shares into the resistance at the $50 level, we could see an interesting little battle. If the stock can put the $50 region in its rear-view mirror, it could use this region as support. On the other hand, a rejection at $50 could simply strengthen the region's resolve as resistance.