Bulls and Bears Matched Ahead Walmart Report
Dow Walmart Inc. Components (WMT) recorded an all-time high in Friday’s session, highlighting continued strength despite escalating tariffs and growing predictions of an economic slowdown. The company has shot on all cylinders in recent quarters, generating profits and expanding margins, so higher stock prices make perfect sense. However, most of 2019’s strength comes from a renewed exodus of brick-and-mortar retailers, raising questions about the longevity of rock-solid metrics.
Market players have a fresh opportunity to debate the trading giant’s prospects this week, with third-quarter earnings scheduled for Thursday’s pre-market. Analysts will be looking for earnings of $ 1.09 per share on $ 127.9 billion in revenue at that time while expecting bullish guidance on 2020 sales and comparative margins. A lack of these numbers could easily trigger a recession, especially with growing pessimism about a trade deal with China.
The stock shot higher after Walmart beat earnings estimates and increased guidance in August, entering a solid uptrend that boosted July’s resistance by julio 115 a few weeks later. The rally narrowed to a trading range in October, with a range break confirmed after gains opened the door to $ 135 to $ 140. However, the downside risk seems greater than the bullish potential right now, with a poorly received report raising the odds of a sell-off filling the July gap between julio 108 and $ 110.
Wall Street has become more skeptical about the company’s future this quarter, with some boutique updates in August and Nomura’s October “Buy” rating as the only notable stocks. The distrust of analysts is not unusual because stocks are fully valued after posting returns above 25% so far in 2019. Look for a trade deal to force a bullish reset of these numbers, while a continued dead end could trigger a flurry of declines, especially if this week’s report does not provide upward guidance.
A multi-year uptrend topped just above encima 70 in the last quarter of 1999, marking a high that was not challenged for the next 12 years. It sold in the lower $ 40s at the end of 2000 and successfully tested that level twice in 2003, but the subsequent rally failed to attract buying interest. The rally ended just above $ 60 in 2004, giving way to a dead tape that bounced along the range support in the fourth quarter of 2007.
Walmart shares rose sharply at the same time as the mid-decade bull market came to an end in a reverse rally, backed by growing fears of an economic collapse. Even so, the rally failed to mount swing highs recorded between 2000 and 2003, continuing the multi-year trading range in 2011, when a steady advance was put in place. It reached the resistance of 1999 a year later and fell into a narrow consolidation pattern that finally produced a breakout in 2014.
The rally failed in 2015 after retail reports highlighted an exodus of brick-and-mortar storefronts to e-commerce sites that included Amazon.com, Inc (AMZN). Walmart responded with the timely acquisition of Jet.com, as well as an expensive deployment of a sophisticated e-commerce portal. Those initiatives paid off in 2017, triggering a historic breakout and uptrend that recorded an all-time high at viernes 120.92 in Friday’s session.
The monthly stochastic oscillator entered a buying cycle in June 2018 and has now reached an extremely overbought level that has triggered multiple decelerations since 2008. At the same time, the stock has carved out an upward wedge pattern often seen in the final stages of an uptrend. The rally in the fourth quarter has just reached wedge resistance, with both technical elements raising the odds of a recession testing the psychological level of $ 100 in the coming months