Walmart's Stock Performance: Post-Earnings Trends to Watch

Uncover Walmart’s earnings report’s hidden secrets. Navigate through the stock’s movements and understand impactful trading strategies.

Strategies for Trading Post-Walmart Earnings Announcement

Welcome to a focused look at Walmart’s earnings report. As always, it’s essential to analyze and be updated about how our favorite stocks perform, especially the giants like Walmart. Let’s dive into the details.

Walmart’s Earnings Announcement

Walmart has announced that it will be sharing its earnings report on the 17th. Observing their performance over the past quarter and this year, the company has experienced significant growth. After initially ascending post-earnings, the stock found its footing at a critical support zone and has been on an upward trend since.

During July, a notable daily squeeze consolidated the stock, setting it up as an attractive trade option. This led to an increase, reaching towards the 1272 extension. By now, most of the upside targets set for the stock have been achieved.

Post-Earnings Behavior

A retrospective glance at the stock’s post-earnings behavior over the past eight quarters offers some intriguing insights. Over the last year, Walmart’s stock saw three gaps higher and one lower. The preceding year witnessed three gaps lower and one higher. This almost 50/50 split reveals that it’s pretty much a toss-up on which direction the stock might move after earnings.

When it comes to the gap movements for these quarters, they’ve varied, with the largest being 7.9% and the smallest at 0.2%. This quarter, market makers are forecasting a move of $5.77, equating to a 3.6% shift in the $160 stock price. Therefore, a move larger than 3.6% is deemed larger than expected, and anything less is below the expected range.

Analyzing Stock Movement and Positioning

Walmart’s stock has shown resilience and strength, but with it already achieving significant milestones, how much further will it soar? There are potential zones of interest: a pullback zone at 156 and a high of 165. A move towards 165 would mean breaking past previous resistance areas, signifying bullish momentum.

However, a broader perspective on Walmart’s stock trend and its Fibonacci pattern suggests a longer-term price target of around 170. Given the expected move on earnings, the probability of the stock surpassing 170 seems relatively low, especially when considering its current momentum.

What This Means for Traders

Given the stock’s past and recent trajectories, Walmart seems a good pick. It’s been consistent in its EPS beats and has adapted well to changing market conditions, with shoppers opting for groceries and essentials rather than luxury items like electronics. This has positioned Walmart, the nation’s largest grocer, with 60% of its annual US sales from groceries, to remain resilient despite inflation concerns.

However, given the stock’s recent impressive climb, it might be time for traders to exercise caution. A neutral trade, betting on a premium crush, seems the most logical at this juncture. It’s also beneficial to analyze what the company shared in its previous quarterly report, as past trends can sometimes indicate future behavior.

An Important Strategy Note

If you plan to sell premium on Walmart, be prepared for the scenario where things might not go as planned. If the stock moves too much, it can impact your strategy. If, for example, a significant drop occurs, it would be wise to buy it back immediately, minimizing losses. When selling premium, it’s crucial never to sell naked options. Instead, employ defined risk strategies to ensure you can exit with the same risk you took when entering.

Wrapping Up

To all the traders out there, keep an eye on Walmart’s performance, but remember to tread cautiously. For any questions or additional insights, feel free to reach out in the comments or connect with me on Twitter at @DanielleSheaTrader.

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