WMT after reporting earnings this AM has popped 5% so far today. Technically, my 4-Hour Chart shows that WMT has recovered 130% of the recent plunge (7/25) from 133 to 119 in reaction to its guidance warning (strange though that might be that all is forgotten or corrected in just three weeks). The stock is heading for a probe of key Fibonacci recovery resistance lodged from 140 to 145, where we will learn if all of the price action since the May 2022 low at 117.27 represents EITHER a base formation and upside breakout into a new bull phase, OR a counter-trend rally period within a still-dominant, larger-developing multi-month corrective process.
From the perspective of my longer-term pattern and momentum work shown on my 4+ year Daily chart, decades of experience analyzing patterns and pattern symmetry suggest strongly to me that a bull phase peaked and ended at the April 2022 high at 160.77. Therefore, my sense is that the down-move in WMT from the April 2022 ATH at 160.77 to the May 2022 low at 117.27 represents the initial "shot over the bow" of a larger-developing, incomplete bear phase that will see a resumption of intense weakness when the current counter-trend strength exhausts itself.
Where might that be? Let's watch WMT first navigate the down-sloping 200 DMA, now at 138.79 (as of last eve's close), and if taken out on a closing basis, then navigate the 140-145 Fibonacci Recovery Resistance zone of its entire April-May plunge (shown on my 4 Hour Chart). If that is successfully hurdled, then we will set our sights and expectations on the 148-150 target zone where WMT strength will close the still-Unfilled Down Gap left behind in reaction to the mid-May earnings miss.
If WMT reverses sharply lower in a powerful downside reversal signal from 1) 139 (200 DMA area)...or... 2) 140-145 (Fibonacci Resistance)... or... 3) 148-150 (5/13/22 Gap-Fill), then my work will be warning me (us) that WMT is extremely vulnerable to another shot over the bow, and will be susceptible to rolling over into a negative period that breaks 117.27 in route to 100.
For the moment, the bulls are in control of WMT, eyeing a test of the down-sloping 200 DMA in the vicinity of 139. Let's watch the action with interest.
Mike Paulenoff is co-founder of MPTrader.com, a live Trading Room featuring his analysis of equity indices, commodities, cryptocurrencies, and trending stocks and ETFs.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
