Berger: Wal-Mart Shares Could 'Shine Again'
Shares of Wal-Mart Stores, Inc. (NYSE: WMT) surged 1.74 percent on Wednesday's trading. In a blog post published Thursday morning, the Steady Trader’s head of investment strategy, Serge Berger, explains this move pushed the stock above an initial technical line of resistance.
The expert assured that, while shares have plenty of hurdles to overcome, the odds of Wal-Mart delivering a better performance over the coming months are increasingly larger.
Berger highlighted the importance of having some context when talking about Wal-Mart. He explains that, when the economic growth rate slows, "people tend to flock to Walmart for shopping, and investors in turn bid up WMT stock. And with the rate of change in economic data having slowed all year at the margin — just as we find ourselves very late in a cyclical bull market and economic recovery cycle — the time might be right for WMT shares to shine again soon.”
A Look At Performance
Year-to-date, Wal-Mart’s stock is down more than 15 percent, versus the S&P 500’s 1.14 percent rise. Moreover, over the past several years, the company has lagged the S&P 500 and other market indexes.
From a technical perspective, he added, the year-to-date relative price movement “has taken the shape of a falling wedge pattern — but if Walmart can break out of that wedge to the upside, it would have obvious bullish implications."
Berger next analyzed Wal-Mart from a multi-year perspective.
"[T]he price movement so far in 2015 has been a one-way street to the downside, resulting in a retest of a major area of support near the $70 level. Both the duration and slope of the decline since January has been extensive, and this multiyear area of support is a good an area as any for a better bounce to occur," Berger wrote.
Wednesday's rally brought shares above their 50-day moving average for the first time in almost six months, he added.
In his opinion, interested investors can look to build a position in this stock and expect for a push into the mid- to high $70s, “using the July 1 lows as a last stop-loss area.”
From a risk management standpoint, Berger mentions Wal-Mart's upcoming earnings call, which is scheduled for August 18.
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