Technical Analysis – WalMart breaches uptrend line; 100-day SMA obstructs the drop


Anthony Charalambous, XM Investment Research Desk

WalMart stock pulled back from a high of 115.26 after nearly eight months of advances, piercing below the uptrend line. The downwards correction has stalled at the 100-day simple moving average (SMA) after its push lower off 108.36, which is the 23.6% Fibonacci retracement level of the up leg from 86.07 to 115.26. It’s worth mentioning that the 20-day SMA has crossed below the 40-day SMA, signaling that the short-term bearish bias seems to be holding.

The momentum indicators are concurring with the bearish bias as the MACD is increasing its negative directional momentum below its trigger, while the RSI is trying to re-enter the oversold area.

If the bears manage to push below the 100-day SMA, the 104.10 hurdle could provide interference to the downfall. If violated the stock could stall around 100.62, where the 50.0% Fibo and the 200-day SMA lie. Penetrating this barrier, and more importantly the 100.00 psychological level, the slide may extend past the 98.80 swing low to test the 61.8% Fibo of 97.22.

To the upside, if the 100-day SMA holds and the bulls close on top of the 108.36 level, a reignited rally up for the swing high of 113.30 may unfold. If the bulls keep up, and the 115.26 high is surpassed, the door would open for the 118.65 resistance.

Overall, the stock is navigated by the bears and a fall below the 97.22 level would shift the medium-term picture negative as well.