Wal-Mart Stores, Inc. stock is up close to 10 percent after reporting quarterly numbers that topped consensus estimates. Many on Wall Street are saying that its “glory days” are back, and that shares are an excellent buy in “a rising rate environment.”
Should investors jump on to the stock, or should they wait for a pullback? Conventional wisdom suggests that after such a massive one day surge, the stock is “more than likely” to take a breather, which should then provide traders with a favorable risk-reward entry.
Switch to Lower Time Frame to Isolate Buy Opportunities
A look at the daily price chart of Wal-Mart shows that the stock, after peaking in January of 2015, went in to a severe down trend, which sent shares tumbling 40 percent. However, sentiment showed signs of improving by the end of year, with the bear trend ending after the stock formed successive higher pivot lows and peaks.
Yesterday’s better than expected quarterly numbers was the latest indication that Wal-Mart could be one of the stand out names of 2016. The trend is bullish, and investors would do well to consider adding the stock to their portfolios. Wait for shares to either consolidate, or pullback, and then switch to a lower time frame (1 hour or 4 hour) to pin point lucrative entry points. On the upside, $70 is the immediate resistance. A close above that should draw more buyers to the stock.
Wal-Mart Stores “Turnaround” Has Just Begun
Not only does the technical picture look promising, even fundamental analysts are betting that the “turnaround” in the world’s largest retailer is finally picking up steam.
Wal-Mart Stores, Inc. shocked most on Wall Street when CEO Doug McMillon announced in October that the company would spend money on wages for employees and e-commerce.
That strategy is finally beginning to bear fruit. Sales have improved, online presence has increased, and customers in general, are having a better shopping experience.
“Wal-Mart Stores is (finally) doing some of the things that they’ve needed to do. They’re doing it right and they’re doing it better,” Craig Johnson, president of retail research firm, Customer Growth Partners, noted.