Source: TradingView.com
Source: TradingView.com

Key Takeaways

  • Walmart shares surged Thursday after the company reported second-quarter earnings that topped expectations and lifted its full-year outlook, as cost-conscious consumers turned to the discounter retailer for purchasing essential items.
  • The share price set a record close Thursday on the highest trading volume since mid May, suggesting active participation by institutional investors.
  • A bars pattern, which takes the stock’s trending move from early May to mid-July and positions it from this month’s low, forecasts an upside target in Walmart shares of around $80.
  • During a retracement, the retailer’s shares may encounter support around $71 and $62.

Walmart (WMT) shares surged Thursday after the company reported second-quarter earnings that topped estimates and lifted its full-year outlook, as cost-conscious consumers turned to the discounter retailer for purchasing essential items. The stock gained 6.6% to $73.18, a new record closing high.

Below, we take a closer look at the technicals on Walmart’s chart and point out important price levels to watch out for following the stock’s earnings-driven jump.

Stock Gap to New All-Time High

Walmart shares have remained in a long-term uptrend since the 50-day moving average (MA) crossed above the 200-day MA to generate a golden cross buy signal in November 2022.

More recently, the big box retailer’s stock has undergone a pullback of around 6%, but promptly found buying interest near the 50-day MA prior to Thursday’s earnings-driven gap to a new all-time high (ATH).

Importantly, Thursday’s move occurred on the highest volume since mid May, suggesting active participation by institutional investors.

Watch This Key Upside Price Level

Given Walmart shares now trade in blue sky territory with no higher price action on the chart to analyze, we can use a bars pattern to project a potential price target. We do this by taking the stock’s trending move from early May to mid-July and positioning it from this month’s low. Doing so forecasts an upside target of around $80.

This technique also provides a timeframe of when Walmart shares may reach the target outlined above if price history rhymes. The prior trending move took place over 52 trading days, meaning that if a similar trend plays out, the shares could reach this target by around late October.

Retracement Areas to Monitor

Although the stock registered a record close on Thursday, there’s always the possibility for profit taking after a strong move, especially with the relative strength index (RSI) indicator nearing overbought territory. Investors, therefore, should monitor these two key support levels that may come into play during retracements.

The first sits around $71, an area near the stock’s prior record high that may need to be tested before a sustained move higher.

A more significant pullback could see the shares revisit the $62 area, a location on the chart just above the rising 200-day MA likely to encounter support from a two-month period of price consolidation between March and May.

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