Tuesday, December 11, 2012

WMT - Christmas season bringing the company some coal?

So many charts look like this WMT chart these days...a collapse from its October highs to its mid November lows on the 200day moving average, and now a rally back to its flat/descending 50day and 100day  moving averages . This is not necessarily a "dead-cat" bounce in one of the worlds largegst and most successful retailers, but it is nearly a textbook example of a high probability short.

Trade premise:
Enter short somewhere between $71.50 - $73 and cover near the 200day moving average currently near $68.50 (unfortunately I wrote this midday when the stock was trading near $72 - but the analysis still holds). Those less averse can start covering near $70 while those more tolerant can cover some on the 200day moving average and keep some on if the broad market collapses and WMT follows it lower towards $65. A prudent stop would be over the 100day moving average currently near $73.25 (or according to your own risk tolerance).
 

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