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Wal-Mart Price Rollback

01/02/06 08:23:40 AM
by Gary Grosschadl

Wal-Mart is famous for its rollback pricing, and its stock is also playing the same tune.

Security:   WMT
Position:   Sell

Wal-Mart's daily chart (Figure 1) shows a triangle or trendline break that occurred several trading days ago. The nearby 50-day exponential moving average (EMA) held only brief support. Lower support targets were assessed using Fibonacci retracement levels. Based on the high and low of the chart, the next two support levels were indicated at 50% and 61.8% retracements.

Several indicators show their own bearishness. The directional movement components atop the chart show bearish power with a rising average directional movement index (ADX) between the two directional indicators. Bearish power is indicated with -DI above +DI. The lower indicators have the moving average convergence/divergence (MACD) and the relative strength index (RSI) below their often key areas of support.

FIGURE 1: WMT, DAILY. The daily chart of Wal-Mart shows two Fibonacci support levels.
Graphic provided by:
Candlestick readers should note the bullish engulfing pattern at the bottom of the chart and the spinning tops at the chart highs. These indicators are often reliable turning points at market bottoms and tops.

Looking ahead, any uplegs may only be bear rallies if the overhead 50-period EMA provides stiff resistance, while fresh support above that same line would encourage new bulls into the market.

Gary Grosschadl

Independent Canadian equities trader and technical analyst based in Peterborough
Ontario, Canada.

E-mail address:

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Date: 01/05/06Rank: 5Comment: 

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