Walmart Shares Eyeing Further Downside on Earnings Release?

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Walmart shares could be ready to resume their slide after a correction to the 38.2% Fibonacci retracement level. Price appears to have turned upon hitting $70/share and could be due for a drop to the swing low at $56.15/share.

The 100 SMA just crossed below the longer-term 200 SMA to indicate that sellers are taking control while stochastic is on the move down, which means that bearish pressure is building up. Similarly, RSI is pointing down so Walmart shares could follow suit.

A larger correction to the 50% Fib might still be possible, as this area lines up with the moving averages, which might hold as dynamic resistance levels. This also coincides with an area of interest or former support level. A rally past the 61.8% Fib or $77.50 could show that an uptrend is taking place.

Walmart is set to print its earnings report on Thursday and might show similar results to other top retailers in the country. Earnings from Nordstrom, JC Penney, and Macy’s all fell short of expectations, underscoring the slump in consumer spending and sentiment for the first quarter of the year.

As Zacks Investment Research analysts have noted, “this retailing giant has been in trouble thanks to rising cost pressure.” Earnings are expected to fall 14% to 89 cents per share while sales are expected to dip 1.5% to $113.14 billion.

Keep in mind that costs for the retail giant have been climbing, as the company hiked wages to pay a minimum of $10 per hour in February. In addition, the company has had plans to close 269 stores, likely weighing on sources of revenue as they also pump more efforts into expanding their e-commerce capabilities.

Moreover, updated management forecasts could have a significant effect on the direction of Walmart shares, as downgraded estimates could set off a longer-term selloff.

 

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.