Walmart Surges Following Q2 Earnings Beat: Here's What To Watch On The Stock

Zinger Key Points
  • If Walmart can remain above the 200-day SMA, the 50-day SMA will eventually cross above the 200-day, forming a golden cross.
  • The stock is trading in a strong uptrend but the upper and lower gap may concern conservative traders.
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Walmart, Inc WMT gapped up over 4.75% off Monday’s close and regained the 200-day simple moving average (SMA) after printing second-quarter 2023 financial results.

For the quarter, Walmart reported adjusted EPS of $1.77 on revenues of $152.86 billion, which beat the consensus estimate of $1.62 and revenues of $150.75 billion.

The multinational retail corporation posted strong growth despite soaring inflation, a series of interest rate hikes and fears of a looming recession. Walmart U.S. net sales rose 7.1% year-over-year, while sales from the international segment increased 5.7%.

Walmart guided its full-year 2023 profits lower, however, forecasting adjusted EPS to decline between 9% and 11%.

The move higher on Tuesday saw Walmart working to erase a massive decline the company suffered after printing first-quarter earnings on May 17, where the stock plunged 20% between that date and May 20.

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The Walmart Chart: Walmart began trading in its current uptrend on July 26, when the stock bounced up off the $120.06 level. The company’s most recent higher low within the uptrend was printed on Aug. 5 and $125.12 and the most recent confirmed higher high was formed at the $134.23 mark on Aug. 1.

  • Walmart is now trading above the 200-day SMA, which indicates the stock is trading in a new bull cycle. If Walmart can remain trading above the 200-day for a period, the 50-day SMA will eventually cross above the 200-day, which will cause a golden cross to form on Walmart’s chart.
  • On Tuesday, Walmart was working to close a gap between $137.44 and $146.46. The gap-up open left a lower range empty, however, between $133.57 and $139.19, which likely makes some bullish traders weary. Gaps on charts fill about 90% of the time, which makes it likely Walmart will fill both empty trading ranges in the future.
  • Conservative bullish traders may choose to wait until Walmart declines to fill the lower gap and then prints a reversal candlestick, such as a doji or hammer candlestick, near the lower range to signal a reversal to the upside is in the cards. A retracement lower is likely to come soon because Walmart’s relative strength index is in overbought territory, measuring in at about 71%.
  • Conservative bearish traders will want to wait for Walmart to signal that buyers have become exhausted, and then for big bearish volume to drop the stock back below the 200-day SMA. Bearish traders can watch for Walmart to print a bearish reversal candlestick such as a doji or shooting star candlestick to suggest the current top for the stock is in.
  • Walmart has resistance above at $145.73 and $151.58 and support below at $140.35 and $135.37.

See Also: Why Is Target Stock Trading Higher?

Photo: Created with an image from Mike Mozart on flickr

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