Fan Yang
All posts from Fan Yang
Fan Yang in Fan Yang,

Stalking the Walmart (WMT) Selloff

Walmart (WMT) Weekly Chart 10/16
(click to enlarge)

From the highs of almost 91 at the very beginning of the year, Walmart (WMT) has been in a free fall as we can see in the weekly chart. Today, we had the biggest slide this year, creating the bearish engulfing bearish candle we see the weekly chart. while it is possible for some near-term pullback towards say 62.50 or even 64, I would not consider buying. You might look like a genius if you caught this as a bottom, but after such bearish acceleration in a downtrend, I would refrain until price stalls, and is around some key support.

For example, there is a support/resistance pivot around 57.40-57.50.  Again, in an oversold market, I wouldn't be surprised of a pullback. But to me, it might be a few weeks of price bottoming action before I consider a buy around this area. In fact, if price does suddenly pull back to 64, I would consider shorting with a bearish outlook towards 50. 

Walmart (WMT) Monthly Chart 10/16
(click to enlarge)

The monthly chart shows that WMT has been in a bullish market after the consolidation between roughly 2000 and 2011. 50 is a psychological level that is in the middle of this range. An even better price might be 42. However, if the market is still going to be bullish, it might not make it to 42. 

Let's say I have a buy at 50, and a stop at 38. A viable target is 70, so that would give an almost 2:1 reward to risk ratio. Buying around 45 will provide a better R:R, and is still a viable place for a bullish market to develop.