Wal-Mart hit New High on Earnings Beat

Published on Thursday, 17 May 2012 16:58 Written by David Becker

New York, May 17^th (TradersHuddle.com) –  Wal-Mart (NYSE: WMT) earned $3.74 billion, or $1.09 per share, in the quarter ended April 30. That compares with $3.39 billion, or 97 cents per share, in the year-ago period. That latest results beat the $1.04 per share expected by analysts.  Revenue at stores opened at least a year rose 2.6%, which was above the 1.4% estimate from Wall Street.

Price action was very positive after the earnings release.  The stock price surged on the open, gapping higher by nearly 4%, before pushing higher and reaching a 52-week high.  The stock sold off toward the close along with the broader markets.  A close above the $62 dollar levels signals a breakout on the upside.  Resistance is seen near $64, created by an upward sloping trend channel that connects the highs made in March and April.  Support on the large retailer is seen near the 50-day moving average at $60.

Momentum increased substantially after Thursday's price action.  The MACD (moving average convergence divergence index) surged to .30 which is the highest level seen during the past 6-months.  The MACD created a buy signal in mid May were the spread 9the 12-day moving average minus the 26-day moving average) crossed above the 9-day moving average of the spread.  The breakout, after a period of consolidation, created a spike in momentum.

The RSI (relative strength index) which measures over-bought and over-sold levels moved higher printing near 68, which is the upper end of the neutral range for the RSI.  During the last 6-months, the RSI has remained in neutral territory.

Price action sliced through the upper end of the Bollinger bands, moving above the Bollinger high which usually designates the top end of a trading range.  This movement likely foretells a new trading range for WMT.  Additionally, volume surged above the 50-day moving average of volume which confirms investor sentiment.