In Friday evening's market wrap at premierinvestor.net, we went through a rather detailed analysis of Wal-Mart's (NYSE:WMT) $46.51 +4.30% technicals as a stock to look for potential strength and perhaps signal a turn in the retailing group as well as the broader market averages. While its too early to say that the "past" is starting to replicate the future, today's bullishness in Wal-Mart (WMT) is intriguing nonetheless. Traders are currently monitoring the stock for a trade at $47, which begins to set up what traders wanted to first monitor for from Friday's wrap.
Wal-Mart Chart - $1 box
Our thinking has been that a bullish trader would have done well to have bought shares of WMT at $47 back in September of last year, when the stock gave a "double-top" buy signal. Months later, shares of WMT eventually gave a "sell signal" at $57 after trading as high as $63, but well short its bullish vertical count of $79. One reason we've identified WMT as a potential bullish candidate is that the stock achieved its bearish vertical count of $46 on Friday. Note: The last three columns of X and O in the above chart is one way a trader/investor can perhaps "envision" a trading scenario and outline stops/action points for future trading. Right now, we're monitoring for a trade at $47, which would be a 3-box reversal from $44.
Wal-Mart Chart - Daily Interval
With conventional retracement overlaid, a chartist combining his/her point and figure charts along with bar charts begins to define some other "levels" to monitor going forward. If the past is to present itself in the future, we might begin looking for about 5-days or so of consolidation. MACD continues to plunge lower, very similar to that found back in September. Only with some consolidation in the stocks of WMT, does MACD begin to stand a chance of "rounding out." Then, just as we noted on September 24th, MACD crossed ABOVE signal, just when WMT's p/f chart gave the buy signal. We can also perhaps use the 09/24/01 volume of 13.9 million shares as a "test" for bullishness should WMT get above the $47.50 anytime soon. For a prolonged upward move, a bullish trader would like to see volume in excess of 13.9 million shares.
10-year YIELD Chart - Daily Interval
Earlier today in the market monitor on OptionInvestor.com we noted that the YIELD on the 5-year ($FVX.X) had turned lower, while the 10-year YIELD ($TNX.X) and 30-year ($TYX.X) were still green. However, the lower YIELD put us on alert for potential equity weakness when the Dow Industrials were up about 75 points and the Dow Industrials (INDU) 7,792 +8.10 points (+0.13%) now shows a fractional gain.
In the last couple of hours, we've seen YIELD on the longer maturities like the 10-year and 30-year follow the 5-year lower and stocks have done the same.
As it relates to Wal-Mart (WMT), a stock trader (bull or bear) understands the implication of buying/selling in Treasuries and could "adjust" his/her retracement on the 10-year to perhaps correlate or define a "range" as it relates to WMT. The thinking becomes. If WMT can firm up as the 10-year YIELD hangs around the 4.438% level, or if WMT firms up despite a move lower in the 10-year YIELD, then equity traders are on further alert for pending strength in WMT on a break above $47.50. Until that time, looking for other stocks that are near their bearish vertical counts that traded strong from identifiable patterns from their September lows.
In Friday's market wrap at premierinvestor.net, we also correlated the point and figure chart of WMT against the Bullish % Charts. Again, very similar market environment found currently as that found after the September 11th terrorist attacks.