• Investing
  • Stock
Round Table Thoughts
  • Economy
  • Editor’s Pick
Home Stock Can Walmart Weather the Storm?
Stock

Can Walmart Weather the Storm?

by February 23, 2023
by February 23, 2023 0 comment
Share
0
FacebookTwitterPinterestWhatsapp

Walmart’s (WMT) stock price jumped slightly over half a percent last Tuesday upon releasing its Q4 2022 earnings report. The retailer topped Wall Street’s earnings and revenue estimates. And, despite expectations of a retail slowdown in the coming quarters, the company’s guidance matched the undercurrent of accumulation that’s on the verge of an upward breakout.

The buying pressure boils down to one validating factor: Walmart is “naturally hedged,” as CEO Doug McMillion stated during its earnings conference call.

If the economy is strong, then customers will go for more discretionary items.If the economy is weak and customers have less to spend, they’ll shop for value.

Walmart is like a well-diversified portfolio of goods. It has a lot of both. So, does this mean you should include it in your portfolio?

Poised for a Breakout

CHART 1: DAILY CHART OF WALMART STOCK. WMT has been in a trading range between January 6 and February 22, 2023. If the stock breaks out above the rectangle, there’s a chance it could revisit its November high of $154.06.Chart source: StockChartsACP. For illustrative purposes only.

Here’s what WMT stock has going for it.

Locked in an 8-week trading range. Looking past the January 24 NYSE glitch that mars the screen and pattern, you can see a rectangle formation between January 6 and the present. Resistance is roughly at 147.75, while support is near 138.65.Attempted breakout. Bulls attempted to ride the momentum of WMT’s positive earnings report on Tuesday, February 21, beyond the top of its range. That didn’t quite work out, as shares failed to close above the range. But volume behind the attempt spiked. On the following day, despite price nearly retracing the previous day’s candle, note the low volume supporting this bearish attempt. It appears as if buying pressure may have the upper hand.Buying pressure building up. The accumulation and distribution line seems to support this thesis, as the buying pressure outlines a clear uptrend and divergence despite a flat and seemingly “sideways” bounce in price between support and resistance.

Overall, the chart pattern appears bullish, and it’s important to note that rectangle breakouts on strong volume tend to outperform those without it. With that said, if you trade a breakout above resistance, note that the next  level resistance to anticipate is the November high of 154.06. Placing a stop loss at the bottom of the rectangle formation might also be a prudent choice, as a violation of this low may be considered significant enough to invalidate any bullish thesis.

The Fundamental Picture

Over the last year, Walmart has outperformed its own sector (Consumer Staples) and the broader market (S&P 500). This is evident from a quick-glance scan using PerfCharts.

CHART 2: WALMART VS. CONSUMER STAPLES VS. SPY. Walmart has outperformed the Consumer Staples sector and the SPDR S&P 500 ETF SPY in the last six months.Chart source: StockCharts.com. For illustrative purposes only.

And if you do a quarterly technical check using the Sector Summary tool on StockCharts, you can see that the Consumer Staples Select Sector SPDR ETF (XLP) has a tepid SCTR (StockCharts Technical Rank) ranking of 54.9 against Walmart’s SCTR ranking of 63.9. Though not the hottest technical ranking, this is where you have to weigh fundamental potential against its recent price action.

While Consumer Staples stocks helped investors weather the 2022 storm, 2023 may continue to present most of last year’s challenges, namely rising manufacturing costs that make their way to raising consumer product costs.

Again, Walmart is a well-diversified retailer, with regard to its product segments and its inventory of private label products. Consumer Staples companies that offer private label products tend to be more resilient in inflationary and recessionary environments because they have enough wiggle room to competitively lower their prices, attracting more consumers.

The Bottom Line

Consumer staples companies tend to perform well when the economic environment calls for a more defensive play. Fortunately, Walmart is in a position to shift its focus from staples to discretionary products and back, giving it the kind of adaptability that makes it resilient across different segments of the business cycle.

You Might Also Like
  • MEM TV: S&P Regains Upside Momentum
  • AAPL and TSLA Stocks Are COLLAPSING!
  • Stock Market Dips Below 200-Day Moving Average: Are Your Investments Ready for a Shift?
  • Block and Loaded: Targeting Gains in SQ
Share
0
FacebookTwitterPinterestWhatsapp

previous post
“No Landing” — Sugarcoated Words for Stagflation?
next post
Former Biden official says admin’s latest action ‘normalizes’ White nationalist beliefs about migrants

You may also like

Volatility ($VIX) May Be Providing Clues of a Big Market...

February 3, 2025

Surprise Negative Divergence on Nasdaq Advance-Decline Line

March 26, 2024

Tariff Turmoil: 3 Stocks You Need To Know Right Now!

March 14, 2025

Silver Cross Index Tops Beneath Signal Line on SPY

March 28, 2025

DP Trading Room: Mortgage Rates Hit Multiyear High — Who...

October 16, 2023

$SPY FLAGS NEW “GO” TREND IN THE FACE OF DEFENSIVE...

May 13, 2024

Equities Remain in “Go” Trend as We See Rotation into...

October 21, 2024

How To Stop Missing Trades Using Price Alerts

March 7, 2024

Dow Jones and S&P 500 Close At Record High —...

January 20, 2024

The Most Important Moving Average to Boost Your Investing Success

October 5, 2023

    Stay updated with the latest news, exclusive offers, and special promotions. Sign up now and be the first to know! As a member, you'll receive curated content, insider tips, and invitations to exclusive events. Don't miss out on being part of something special.


    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout, pulls outlook

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025
    • The Unpredictable Stock Market: How to Make Sense of It

      May 8, 2025
    • AMD CEO calls China a ‘large opportunity’ and warns against strict U.S. chip controls

      May 7, 2025

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be...

      June 27, 2024 2,632 views
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as...

      August 9, 2024 2,339 views
    • 3

      Biden appointee played key role in recruiting Chinese...

      June 25, 2024 2,320 views
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful...

      July 10, 2024 2,302 views
    • 5

      Harris VP pick spent years promoting research facility...

      August 29, 2024 2,186 views

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Popular Posts

    • 1

      Trump-era China sanctions ended by Biden may be revived under new House GOP bill

      June 27, 2024
    • 2

      Walz’s honeymoon with China gets fresh scrutiny as Harris camp blasts ‘lying’ critics

      August 9, 2024
    • 3

      Biden appointee played key role in recruiting Chinese businesses to Delaware: ‘Longtime friends’

      June 25, 2024
    • 4

      Shein’s global ambitions leaves some cybersecurity experts fearful of Chinese spy threats

      July 10, 2024
    • 5

      Harris VP pick spent years promoting research facility that collaborated with ‘Chinese military company’

      August 29, 2024

    Latest News

    • Krispy Kreme stock plunges after doughnut chain pauses McDonald’s rollout,...

      May 8, 2025
    • Don’t Buy Robinhood Stock… Until You See This Chart Setup

      May 8, 2025
    • UnitedHealthcare sued by shareholders over reaction to CEO’s killing

      May 8, 2025

    Categories

    • Economy (7,009)
    • Editor's Pick (2,066)
    • Investing (538)
    • Stock (2,530)

    Disclaimer: RoundTableThoughts.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2024 RoundTableThoughts.com. All Rights Reserved.

    Round Table Thoughts
    • Investing
    • Stock
    Round Table Thoughts
    • Economy
    • Editor’s Pick

    Read alsox

    Sector Rotation Model Flashes WARNING Signals

    June 12, 2024

    Lululemon Stock: Try This Simple Analysis...

    June 28, 2023

    Financials Power Price Rally off Lows

    August 12, 2024
    Sign In

    Keep me signed in until I sign out

    Forgot your password?

    Password Recovery

    A new password will be emailed to you.

    Have received a new password? Login here