After reaching new all time highs in January, Wal-Mart has slid more than 30% YTD and remains in a clear downtrend. Fundamentally, the company announced disappointing earnings guidance at its analyst day last month, resulting in a one day drop of more than 10%. The company has been posting disappointing growth figures for its e-commerce unit, and Amazon continues to change the landscape of retail.
Short term, Wal-Mart is a falling knife. Selling pressure continues to pick up at the 50 day MA. The stock shows no sign of breaking out of its downtrend and from a fundamental perspective, the main bullish catalysts moving forward are earning beats, which occurred last week, resulting in a meager 4%+ pop.
As bad as the short term technicals look, Wal-Mart is a behemoth, and with nearly half a trillion in revenue + lots of room for improvement (customer service, e-commerce, store efficiency), the stock can't be ignored.
Long term, Wal-Mart bounced off of a 30 year trend line and has reached historical oversold levels.
With a yield of 3.25%, Wal-Mart offers a favorable risk/reward profile for investors with a medium to long term horizon. A break above the 50 day MA (~$61.20) would signal room for more upside. A move back to the 50% fib retracement level represents more than 20% upside from today's levels.
The Wall Street Fox
The Wall Street Fox utilizes fundamental and technical analysis to generate investment ideas. TWSF holds a MBA, and is currently preparing for the Chartered Market Technician (CMT) designation.
Website: http://thewallstreetfox.com/
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