Wal-Mart Stores Inc. suffering as consumers sit on their wallets

Nov 27th, 2015 – Comment

In a downtrend all year


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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WMT LOGO

Today I will investigate the case for Wal-Mart Stores Inc. (WMT NYSE). This will conclude Ken’s assignment that included the analysis of Power Corp. of Canada (POW TSX)  published on November 25, 2015.

This will be the third time since 2008 that I probe the charts for WMT. The last occasion was on July 23, 2012 when the shares were trading for $72.25. Clayton wanted to know if the advance that started in October of 2011 had more to give. The analysis indicated that the shares were meeting resistance at $73.00 and that he would be best served monitoring the trading pattern ahead of the release of Q2 results scheduled for release in August.

By the spring of 2013 WMT was trading in a range with support at $70.00 and resistance at $77.50. The stock oscillated in the range through November of 2014 when it broke above resistance and touched a 52-week high of $90.97 in January of 2015. But that was all the stock had to give.

A review of the charts will add depth to your evaluation of this investment.

 

WMT

The outstanding pattern on the three-year chart is the steep downtrend line that indicates that sellers are in control of the market. Every attempt to move higher in 2015 has been met with selling pressure. Other warning signs worth noting include the breach of the 50-day moving average in February. In addition the stock couldn’t hold support along the 200-day moving average and in May a death cross formed. From there WMT posted a continuing series of lower highs and lower lows with relentless resistance along the 50-day moving average. Sadly the selling continued taking the shares to a 52-week low of $56.30 in November of 2015.

 

 

 

 

 

WMT2

The six-month chart provides a close-up of the resistance along the 50-day moving average that will have to be overcome if there is any hope of a new up leg developing. Retailers were hoping that the lower price of gasoline would get consumers spending their savings at the pump. That has not been the case as many decided that the better course of action was to improve their balance sheets by increasing savings and paying down debt.

WMT might get a lift over the Christmas season as they push prices lower to increase competition in the market. However on a technical basis there is little evidence that we can expect a trend reversal.

 

 

 

 

 

Next time I will run the charts for Redknee Solutions Inc. (RKN TSX) for Brent.

 

Make it a profitable day and happy capitalism!

Categories: Retail
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