We reviewed Walmart Inc. (WMT) was about five weeks ago, writing, "Bottom line: Walmart's sharp downside adjustment is likely to be followed by further near-term price weakness. Because we do not see a lot of selling in advance of today's decline we are going to (dangerously) assume that support could develop around $90-$88. If buying support does not develop or does not last long we would likely see a deeper slide in the weeks ahead."
Looking back over the past few weeks (see the chart below), we can see that the support in the $90-$88 area did not hold for that long and the downtrend has continued. Let's take a fresh look at the charts and indicators and see what new levels we should pay attention to.
In this daily bar chart of WMT, below, we can see that the slope of the 50-day moving average line remains bearish and now WMT is trading below the cresting 200-day moving average line. The daily On-Balance-Volume (OBV) line continues to drift lower, telling us that sellers of WMT are being more aggressive with heavier trading volumes being seen on days when WMT has closed lower.
The trend-following Moving Average Convergence Divergence (MACD) oscillator has turned up for a cover shorts buy signal but this may not last long as the two moving averages that comprise this indicator have begun to narrow.
In this weekly bar chart of WMT, below, we can see that prices are below the cresting 40-week moving average line. Reading the chart from right to left we can see that the next possible area of support (former resistance) is the $80-$75 area.
The weekly OBV line continues to decline from a mid-January peak signaling more aggressive selling on this time frame. The weekly MACD oscillator shows a crossover to the downside in February for a take profits sell signal.
In this Point and Figure chart of WMT, below, we can see that a trade at $85.00 will be a new low for the move down on this chart and could open the way for a longer-term price target of $67.00.
Bottom line: WMT shows potential chart support in the $80-$75 area from May to September of last year. While this support looks significant it is up to 11 months old and investors from that period may not be inclined to be buyers as they may have taken profits during the October-January rally. A decline of $20 on WMT would translate into something like a $137 loss on the Dow Jones Industrial Average (DJIA).