Walmart WMT has had a nice run over the past several months and is currently consolidating under its 52 week highs. In the chart below you can see the nice consolidation pattern that has been put in over the past 3 or 4 weeks. During this time, the Squeeze indicator has been pulling back and the dots have turned red. The red dots are telling us that WMT is setting up for a big move.
I’m expecting the next move is going to be higher due to the position of the moving averages. We’ve got the 8, 13 and 21 EMAs nicely stacked on one another in a bullish fashion from small to large.
So what am I waiting for to take the trade?
I’d like to see our modified MACD Histogram turn back up and for the stock to take out today’s high. I was tempted to buy the hit of the 21 EMA today but decided to be patient and let the momentum start to shift back up.
In addition to the daily chart here, I’ll be watching the hourly chart for that potential momentum shift to the upside to take the trade.
If and when this setup triggers, I’ll be looking at picking some JUN 77.5 Call options which are currently trading for about $2.05.
If Walmart can break above $79.28 level, my first target would be the 27.2% extension of the last leg up which puts us at $81.26. The next target would be $83.77 which is the 61.8% extension (not shown).
For a Stop, I would close the trade on a close below the 38.2% retracement of the Fibonacci grid which also lines up with a previous swing low from 4-18-13.
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