Walmart Vs. Lowe's: A Technical Analysis

Shares of both Walmart Inc. WMT and Lowe's Companies, Inc. LOW may each be in trouble, but for different reasons.

Walmart is trading just below an important resistance level. The sellers who have gathered around $143.50 have kept a top on the stock for more than a month. If shares can’t break through this important level over the next week or two, there’s a good chance that a new downtrend forms.

There’s no clear resistance hanging over Lowes, but the shares are overbought.

Many computerized trading algorithms are based on probability theory. And it states that 95% of all trading should be within two standard deviations of the average.

The red line on the following chart is two standard deviations above the 20-day moving average price. When the stock exceeds this threshold the algos sell it because they anticipate a revision to the average.

This puts pressure on the stock and could force the price lower. It has happened three times since March and it may be happening again.