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Short Trade Idea
Enter your short position between $120.27 (Friday’s close) and $123.48 (an intermediate horizontal resistance level).
Market Index Analysis
Walmart (NASDAQ:WMT) is a member of the Dow Jones Industrial Average Index, the S&P 100 Index, and the S&P 500 Index.
All three indices trade near all-time highs, driven by an AI frenzy reminiscent of the 1700s French stock market.
The Bull Bear Power Indicator for the S&P 500 Index is bullish with a negative divergence.
Market Sentiment Analysis
Equity markets enter the final trading week near all-time highs, and the start of the week is bullish as oil prices dropped towards $90 per barrel amid hopes of a deal despite mixed messaging from the US and Iran. Consumer confidence continues to retreat, while borrowing costs are at decade highs. Earnings from Marvell Technology, Salesforce, Costco Wholesale, Dell Technologies, Dollar Tree, Best Buy, and The Gap are on deck.
Walmart Fundamental Analysis
Walmart is one of the largest companies by revenue globally, the largest private employer, and the largest publicly traded family-owned company. It has over 10,000 stores operating over 45 names in 24 countries.
So, why am I bearish on WMT following its post-earnings sell-off?
Walmart reported revenues of $177.75 billion and earnings per share of $0.66, while expectations called for $174.84 billion and $0.66, respectively. I remain bearish due to margin pressures from rising fuel costs, excessive valuations, and increased competition from Shein and Temu, amid declining discretionary spending. I am equally bearish on unusually high options activity, which shows up to 68% bearish activity.
Metric | Value | Verdict |
P/E Ratio | 42.35 | Bearish |
P/B Ratio | 10.16 | Bearish |
PEG Ratio | 4.48 | Bearish |
Current Ratio | 0.77 | Bearish |
ROIC-WACC Ratio | Positive | Bullish |
Walmart Fundamental Analysis Snapshot
The price-to-earning (P/E) ratio of 42.35 makes WMT an expensive stock. By comparison, the P/E ratio for the S&P 500 Index is 32.19.
The average analyst price target for WMT is $137.81. This suggests moderate upside potential, but downside risks remain high.
Walmart Technical Analysis
Today’s WMT Signal
The WMT D1 chart shows price action inside a bearish price channel.
It also shows price action between its ascending 50.0% and 61.8% Fibonacci Retracement Fan levels.
The Bull Bear Power Indicator is bearish and remains below its descending trendline.
The average bearish trading volumes are higher than the average bullish trading volumes.
WMT corrected as the S&P 500 Index remains near all-time highs, a bearish confirmation.
My WMT Short Stock Trade
WMT Entry Level: Between $120.27 and $123.48
WMT Take Profit: Between $95.42 and $98.88
WMT Stop Loss: Between $132.12 and $137.81
Risk/Reward Ratio: 2.17
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