Wal-Mart Well Structured Setup

Published on Friday, 03 September 2010 06:56 Written by TradersHuddle Staff

New York, September 3rd (TradersHuddle.com) - Shares of Wal-Mart Stores, Inc. (NYSE:WMT) closed the trading session at $51.76 near its 50 day and 200 day moving averages currently set at $50.47 and $52.81 respectively. Wal-Mart's price action is above the 50 day moving average but below its 200 day moving average, which provide a nice trading setup, with clear reference points.

Wal-Mart Stores, Inc. (NYSE:WMT) operates discount stores, supercenters, warehouse membership clubs, and neighborhood markets. The Company's stores sale products like general merchandise, apparel, electronics and groceries. Wal-Mart operates the warehouse membership stores under the Sam's Club name, where the company sell assorted merchandise including its private label products. Wal-Mart was founded by Sam Walton in 1945 and is based in Bentonville, Arkansas.

Wal-Mart price action seems to be setting up for a tight range between the 50 day moving average as support and the 200 day moving average serving as resistance.

A tiered approach to enter the stock, appears to be the best way to maximize possible movements from the stock, as traders could enter Wal-Mart with a small position and wait for the stock to break out above the 200 day moving average at $52.81, where traders could add to their position as momentum builds with the breakout. The flip side will be if support being referenced at the 50 day moving average set at $50.47 breaks it could mean further downside in the horizon for Wal-Mart.