Walmart's earnings reaction was overdone; technicals suggest a bottoming process with a likely bounce if price breaks above 107.

I'm looking forward to this last one that you brought today Mike. You've got Walmart here came under some pressure with its earnings despite a lack of consensus about whether or not they were strong.

There seems to be a great divide there. We are seeing Walmart under some pressure even though it has a 52% increase in in US marketplace sales in fiscal 27. So, how are you approaching Walmart right now? And what are your expectations going forward?

Yeah, I'd almost classify this as a as a bottom feeder type, but we we did see a really nice base get put in there at about just above the 102 level. And you and you I didn't think the numbers were that bad.

Obviously, the market was looking for something even better. And you know, I think that reaction is pretty overdone and we we do have a significant gap to the upside if we can get this thing going.

Now, it doesn't uh it doesn't have a whole lot of implied volatility to it. So, I'm going to approach this with a calendar spread because even though we're on the lower end of this trading range, implied volatility on a relative basis is not expensive.

That screams calendar or diagonal if you like that sort of thing. But I'm going to go with a with a call calendar. So, uh, I'm looking at next week or no, I'm sorry, this week, uh, the 94 versus 918 106 call spread.

So, not even not even covering half of that gap or this is a call calendar, not even covering half that gap. It's going to be relatively cheap. Uh, and uh, for about 85 cents and so uh, I want to get above th those those little recent highs at 10367.

And the way I have it modeled out, this thing should make about a$125 to a$145 depending on what implied volatility does. And uh you know, so for a calendar spread, that's really good reward to risk.

And you know, just relatively not, you know, I I mean, how scared can you be, you know, buying Walmart at prices that we haven't seen for quite a while?

Yeah, less expensive trade here, Rachel. As we're looking at Walmart, I mean, it's been under really like almost a magnifying lens like scrutiny of late in terms of its numbers and the reaction that we saw, but what are you seeing in the in the technicals as we look back over just how much pressure has been put on this name?

Yeah, so uh like you mentioned, there has been a a ton of pressure, especially we had that big double top breakdown and the riskon environment for equities really hasn't been great to staples. we haven't really seen a lot of defensive rotation and just the other week we did see that breakaway gap, that break of support as indication of that new downtrend.

And however, I I'm kind of uh agreeable with you here. I'm in the camp that this little triangle consolidation below gap resistance at 107 uh may eventually turn into an exhaustion gap.

A couple hints I'm looking for uh is is possibly momentum with the MACD forming that bullish divergence off of the lows. we have seasonal headwinds as well with seasonality coming right around the corner.

So, it could uh kind of suggest further rotation into this name as well as uh looking at some of the long-term levels, too.

And Rachel, we were, you know, talking about some of the pressure it's been under. But let's look at more of those long-term levels as well here because I mean, as I'm looking over the the five-year chart that I just had pulled up, I mean, we're up north of 100% in Walmart, it certainly hasn't been under the microscope like we've seen of late over this longer term scale.

Yeah, I would agree. The longer term really paints a picture of why I believe investors and and traders will step in and buy Walmart at these crucial levels. So, we have uh the weekly price sitting right at the confluence of prior highs in that 38.2% Fibonacci retracement around 102.

So, that was the level that um uh he highlighted as well. And momentum to the downside has been strong, but the MACD is showing that there may be early signs of that waning. So I I would say the biggest signal for a confirmed bounce for traders and investors here is going to be a weekly close above that low candle.

So a weekly close above 107 to confirm a bounce for further upside in Walmart here.

All right. And we're just about $2 off of that retracement level that you mentioned and about $3 below where we're looking to close to confirm some of this upward movement. We're at 10433 for Walmart. It is up 1.2% today.