Chart Alert: Wal-Mart (WMT, TGT, COST)

Wal-Mart Stores Inc. (NYSE: WMT) is supposed to be the retail winner in a depression or recession as more and more consumers are forced to shop at the world’s largest retailer whether they want to or not.  There is no arguing about the notion that consumers can save money if they buy at Wal-Mart.  But several key issues have been happening here, and the company is at risk of having one of the worst charts of all current Dow Jones Industrial Average members.

The sad part here is that Target Corp. (NYSE: TGT) has performed even worse over the last 5 trading sessions.  Compared to the 52-week lows, Target has held up significantly better.  Costco Wholesale (NASDAQ: COST) is the stand-out stock with its shares almost flat over the last five days.  As discussed below, Wal-Mart’s stock chart is in a precarious position.

Last week represented a technical or chart failure and we have had this one on “chart watch” ever since.  It failed to hold above its 50-day moving average.  From the run-up from early March at the lows it ran for a solid month but even then it failed to get above the 200-day moving average.  This you will see with the chart provided by StockCharts.com.

The good news is that the shares have been trying to form a base here in the last three trading days and shares did close up 0.65% at $48.56 today.  Before today, Wal-Mart had only risen once in the last seven trading sessions.

Goldman Sachs just kicked the stock off its prized Conviction Buy List . The company’s huge share buyback has failed to enthuse investors.

At $48.56, this stock is barely above the lows of the 52-week trading range of $46.25 to $63.85.  This stock came within about 3.5% of new fresh 52-week lows as the low yesterday was $48.05 and the low on Monday was $48.22.  Today’s lowest price was $48.10.  But today also represented the highest close over the last three trading sessions.  So technicians will be watching this one  like a hawk.  The chart acts like it is bottoming out.  If it fails at all during the next two trading sessions then we will be of the opinion that Wal-Mart is going to challenge the charts for new 52-week lows.

Imagine at the peak of the recession after Wal-Mart won over more customers that its stock is within striking distance of 52-week lows.  Some would call it irony, and some would call it deserved.

JON C. OGG
JUNE 17, 2009