70 days of suffering in WalMart

1993_walmart

Everyone says they’d like to buy blue chips on a pull back. The problem is that it take a lot to disrupt the returns of these glacial behemoths. So when they do pull back, they don’t look so nice from a fundamental or chart perspective.

$WMT has some stink on it right now. It’s useless to get into all the minutia and fundamentals of why price performance has been poor recently. A brief summation would be that nimbler opponents are beating them online, and they have a big wage problem.

These seem like the same problems they’ve always had. Despite decades of living with these struggles, the sun continues to shine on the fortunes of $WMT.

If the negativity is keeping you away from these opportunities, it might pay to review different times when this happened in the past and “look ahead” to see how this negativity played out.

Hint: it usually works out pretty well.

We examined all of the instances in which $WMT dropped more than 8% in 70 days. Then we looked ahead at what happens in the next 40 days. Since 1987, this happened 73 times and $WMT was up 76% of the time in the next 2-months. The reward-to-risk ratio is stacked at 4:1 without using any risk management.

WMT-down-more-than-8-percent-STATS

 

1987 is a long time ago so here are the stats from the most recent 4-years. We have five instances to look at and extract the most dominant patterns from. As you can see, this has been a good trade with 5 of 5 winners and very strong bullish patterns. We do see some volatility after the first month in the trade.

WMT-down-more-than-8-percent-REPORT

$WMT has obviously been a relative underperformer and definitely might not be right for everyone but don’t say the market doesn’t give us gifts ever once in a while.

Data provided by Market Memory. You can see the $WMT study by clicking this link http://goo.gl/Z5hcj9.


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