Wal-Mart (WMT)

Posted by barkand on October 16, 2010 under Uncategorized | Be the First to Comment

Even as the S&P500 was reaching 5-month highs this week, shares of Wal-Mart experienced a selloff. The “divergence” enthusiasts out there would note that some popular measures of internal strength, RSI and MACD (shown below the price chart), have failed to make new highs along with the share price.

Those two things are certainly important to note. I prefer to give a higher priority to volume. And in this case there was no evidence of enthusiastic buyers coming in to the market in the latest rally. Volume didn’t show up until the 3-day selloff this past week.

When a rising 50-day moving average crosses above a rising 200-day moving average, it tends to suggest higher prices ahead. Ironically, this happened during this week’s selloff. But, overall, WMT is looking technically weak. How low can it go? A first stopping point could be the 200-day average around $52.25. This coincides somewhat with an apparent resistance point during the rally at $52, as well as the first Fibonacci retracement point for the 3+ month uptrend beginning in early July.