Walmart stock has not been trading well lately. Can earnings turn things around?
Walmart (WMT) – Get Walmart Inc. Report is due to report earnings before the open on Thursday. However, the stock hasn’t been trading all that well lately.
Although the stock market hasn’t done a great job of moving higher, Walmart hasn’t been able to buck the trend like others have — say, like Airbnb (ABNB) – Get Airbnb, Inc. Class A Report. (Here’s how to trade it).
Walmart stock has fallen in seven of the last nine sessions. Worse, the two “up days” were gains of just 0.02% and 0.3%, respectively. The down days have averaged a loss of 0.86%, including today’s current decline of 0.88% — right in line.
Furthermore, Walmart is working on its fourth weekly decline in the last five weeks and third monthly decline in the last four months.
Other prior retail leaders — like Costco (COST) – Get Costco Wholesale Corporation Report, Home Depot (HD) – Get Home Depot, Inc. Report and Target (TGT) – Get Target Corporation Report — have also been under notable pressure.
So the question now becomes, can Walmart deliver an earnings report that helps stop the bleeding in retail stocks? Can it turn the recent pain into future gains?
Trading Walmart Stock
Daily chart of Walmart stock.
Chart courtesy of TrendSpider.com
For Walmart, I wanted to zoom out and look at the weekly chart, which does a great job highlighting some of these key levels.
Immediate observations include long-term resistance near $152 and recent downtrend resistance from the fourth-quarter high (blue line).
Further, support in the $134 to $135 region is failing ahead of earnings, as is the monthly VWAP measure. The 21-month moving average was prior resistance and failed as support last month and has been acting as resistance since.
Now this is the tricky part.
If we get a bullish reaction to earnings, it’s critical that the rally is not sold into. If it’s sold, that’s not a great sign.
If the rally isn’t sold, bulls will want to see Walmart stock reclaim the $135 level, as well as the monthly VWAP measure and this week’s high near $136. While not on the weekly chart, the $136 area is roughly where the 10-day moving average comes into play.
Powering through all of these marks can really do a lot to unwind some of the recent bearishness of the chart.
Ultimately, Walmart stock would have a tough test in the $139 to $142 region, but that would be a great problem for bulls to have as shares are down in the low-$130s.
If that can’t happen, it may put the 2021 low in play, which is about 5% below current levels down at $126.28.
An eventual break of this level could land Walmart stock down at the 200-week moving average.
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