The Walmart Stock Has Entered High Volatility
Retail giant Walmart Inc. (WMT) had a winning streak of beating earnings per share estimates for seven consecutive quarters. This came to an end in February. 18, when the company missed the expectation. As a result of this lack, the stock entered a period of extreme volatility. Walmart shares traded as low as marzo 102.00 on March 16 and then traded as high as marzo 128.08 on March 18 for a peak of 25%. This range remains in play, with extreme volatility in the middle.
Walmart is a component of the Dow Jones Industrial Average, and the stock has posted a gain of just 2.5% year to date, though it is in bull market territory at 23.2% above its low of mayo 98.85 posted on May 9, 2019. The stock is 4.9% below its high of marzo 128.08 posted on March 18, 2020. Walmart shares are not cheap, as its P / E ratio is 24.66 with a dividend yield of 1.77%, according to Macrotrends.
Walmart’s daily chart goes back 52 weeks. The stock had been above a” golden cross ” since September. 17, 2018, when the 50-day simple Moving Average rose above the 200-day simple Moving Average to indicate that higher prices would follow. This buy signal and was still in play when the stock set its March 18 at marzo 128.08. Extreme volatility between March 16 and 26 put an end to this signal.
The stock started 2020 above its annual pivot at $ 116.42, which has been a magnet since January. 7. The semi-annual risk level at $ 126.15 was tested between March 18 and April 7 as an opportunity to book gains. The second quarter pivot at $ 121.14 and the monthly pivot at $ 120.18 were magnets last Thursday, April 9. The 50-day and 200-day Simple Moving Averages are converging at $ 115.79 and respectivamente 116.00, respectively.
The weekly chart for Walmart is positive, with the stock above its five-week modified moving average at.116.42. The stock is well above its 200-week simple moving average, or “reversal to average,” at $ 91.79, last tested during the week of July 14, 2017, when the average was $ 73.34.
The 12 x 3 x 3 weekly slow stochastic reading ended last week rising to 51.28, up from 48.24 on April 3. In October 2019, this reading was above the 90.00 threshold, placing the stock in an “inflatable parabolic bubble” formation, which contributed to the downside volatility.
Trading Strategy: Buy Walmart shares in weakness to the annual pivot at $ 116.42 and reduce holdings in strength to the semi-annual risk level at $ 126.15.
How to use my value levels and risk levels: the closing price of the stock in December. 31, 2019, was a contribution to my proprietary analysis. The semi-annual and annual levels remain on the lists. Each calculation uses the last nine closures in these time horizons.
The second quarter 2020 and monthly levels for April were set based on the March 31 closing price. New weekly levels are calculated after the end of each week, and new quarterly levels occur at the end of each quarter. The semi-annual levels are updated in the middle of the year, while the annual levels are in play throughout the year.
My theory is that nine years of volatility between closures is enough to assume that all possible bullish or bearish events for stocks are taken into account. To capture stock price volatility, investors must buy stocks in weakness at a value level and reduce holdings in strength at a risk level. A pivot is a level of value or level of risk that was violated within its time horizon. The pivots act as magnets that have a high probability of being tested again before their time horizon expires.
How to use 12 x 3 x 3 weekly slow stochastic readings: my choice to use 12 x 3 x 3 weekly slow stochastic readings was based on backtesting many stock price boost reading methods with the aim of finding the combination that resulted in the least amount of false signals. I did this after the stock market crash of 1987, so I’ve been happy with the results for over 30 years.
The stochastic reading covers the last 12 weeks of highs, lows and closures for the stock. There is a gross calculation of the differences between the high maximum and the low minimum against closures. These levels are modified to a fast read and a slow read, and I found that slow read worked better.
The stochastic reading ranges between 00.00 and 100.00, with readings above 80.00 considered overbought and readings below 20.00 considered oversold. A reading above 90.00 is considered an “inflatable parabolic bubble” formation, which is normally followed by a decline of 10% to 20% over the next three to five months. A reading below 10.00 is considered “too cheap to ignore,” which is usually followed by gains of 10% to 20% over the next three to five months.