After posting strong results Thursday morning, Walmart ( WMT) is giving back some recent gains.
It's not too surprising, actually, the stock had been up 20% between a swing low in March and recent highs this past Monday. Even the solid earnings and guidance from today could not push Walmart to new highs, but then we often see a "sell the news" effect when a stock runs higher into earnings.
This morning the company reported a slight beat vs. expectations, but importantly raised its 2024 estimate significantly. The company expects annual net sales to rise between 4% and 4.5%, compared with the prior outlook at 3.5%. Walmart stated gross margins improved this past quarter, thanks to easing in supply constraints and fewer discounts. In contrast, rival Target ( TGT) yesterday cut its fiscal year sales and profit forecast. For Walmart, earnings were up 55% over 2022.
The chart shows Walmart to be in an interesting spot. While the stock is falling a bit today there are strong levels that could provide good support for the stock to rally smartly. The 50-day moving average is pierced today and below there we see the 200-day moving average is looming large.
If there is a pullback to that area, call it $147 or so, we could see a nice bounce from there. One thing notable in the top pane is the heavy volume today, the first day of distribution (institutional selling) since June. We could see a continuation of the selling, but certainly it is likely to be contained.
For a more detailed look at the chart, click here.
