Weak Stock WalMart WMT Breaks to New Lows in Downtrend

Aug 19, 2015: 10:23 AM CST

Wal-Mart (WMT) continues to appear on our stock scans as a “Weak Stock Getting Weaker,” and shares gapped and broke to a new swing low in an ongoing downtrend.

Let’s update our chart and note the breakdown – and where price could be headed:

First, compare Wal-Mart’s ongoing downtrend and “Weak Getting Weaker” status with that of Home Depot (HD) which I charted yesterday as a “Strong Stock Getting Stronger” with its own breakout to a new 52-week high.

I’m underscoring for you the importance of a trend and why it’s superior to trade WITH an ongoing trend as opposed to against it with reversal or ‘fade’ trades (fighting a trend).

Also, take a look at a July 1st stock scan post where Wal-Mart was identified then as a “Weak Stock Getting Weaker.”

Beyond that, review June 3rd’s “Charting Three Weak Stocks in the Dow Right Now” update.

Main idea:  Stocks in a downtrend – weak stocks – tend to get weaker, NOT stronger.

We see three specific support breakdowns in Wal-Mart stock highlighted above.

Note the little support shelves – with positive momentum divergences – and the resulting breakdown as the strong downtrend continued for shares.

We’re seeing not just another breakdown, but a gap scenario (strong impulse) on surging volume.

Odds favor a continuation lower in this “Weak Stock Getting Weaker” component of the Dow Jones Index.

Here’s the Weekly Chart for level planning and targeting:

Note the strong uptrend into the early 2015 peak at $90.00 per share.

Volume continued to diverge or “dry up” during the consolidation and into the “Rocket Reversal” Pattern.

Price fell sharply lower to create the current Daily Chart downtrend we’re seeing now.

Although buyers initially formed a clear support shelf above $70.00 per share, sellers broke through this level this week with gaps and new lows.

We’re trading into the first simple target which is the $67.50 level – the support shelf from late 2012.

In the event sellers continue the downtrend with another breakdown under $67.50, then we’ll look for a play down toward the $60.00 per share level, the pivot swing high from early 2012.

Whether you’re trading Wal-Mart (WMT) or not, you can use it as a great educational example of the “Weak Stock Getting Weaker” concept – and remind yourself not to fight trends in motion.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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2 Responses to “Weak Stock WalMart WMT Breaks to New Lows in Downtrend”

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    That article is not only beneficial for the buyers but also for the sellers who can estimate the trading market and then make their decision after a thorough analysis.

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