Walmart may signal market direction

Wal-Mart reports its Q2 financials this Thursday August 14th. As you will note on the longer termed chart above, the company has been consolidating in a large symmetrical triangle for over a year. The shorter termed chart (daily chart) below shows us that Walmart has reached a near termed oversold condition and is rallying off of that state – as illustrated by the turnarounds on RSI, MACD, Stochastics.

Comparative strength vs. the S&P 500 has been poor for Wal-Mart. Cumulative moneyflow (bottom pane) shows that the market has continued to pour money into the stock since February of this year—this despite a declining share price over that period, and poor relative performance. This divergence might be a positive thing –many investors haven’t given up on the stock just yet.

It’s important to watch how Wal-Mart’s earnings come out this week. The company is a true benchmark for the health of the North American consumer. A poor report or lousy guidance might push the stock through the bottom of the triangle in the low-$70’s. That would be ugly for the stock, and for markets. Conversely, a good report would likely allow the stock to continue to consolidate or set it up for a future upside breakout.

More importantly, Wal-Mart’s performance is viewed by traders and market participants as significant to the health of the broader economy, and the market’s health. Watch this stock after earnings are released later this week – the results may give us some guidance if the choppy markets (which I did suggest was likely here: will continue.


I’m on BNN’s MarketCall Tonight at 6:00pm next Tuesday August 19th.

Phone in with your questions on technical analysis of your favorite stocks for Keith during the show. CALL TOLL-FREE 1-855-326-6266 on the day of the show. Or email your questions now (specify they are for Keith) to [email protected]

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