First up this week is retail behemoth Wal-Mart (WMT - Get Report), a stock that's been on the heels of a strong rally in the last year. Wal-Mart's shares have climbed 15% in the past 12 months, offering investors nearly triple the returns of the S&P 500 over that same period. And right now, the technicals point to bigger gains in the near-term.
That's because Wal-Mart is currently forming an ascending triangle pattern, a setup that's formed by a horizontal resistance level to the upside, and uptrending support below shares. Essentially, as WMT bounces in between those two technical levels, it's getting squeezed closer and closer to a breakout above that $62.50 resistance level; that breakout is our buy signal for shares.
Momentum, as measured by 14-day RSI, adds some extra confidence in this setup -- it's been trending higher since the ascending triangle started forming at the start of last month. Volume is textbook in shares of Wal-Mart too. Trading activity has been declining throughout the pattern, something that's actually a positive sign; we'll want to see a volume spike on the breakout as traders participate in the move higher.Ultimately, those supporting factors add confidence to the pattern, but it's crucial to wait for price to move above $62.50 for WMT to become a high probability trade. I also featured Wal-Mart, one of 6 Companies Battling for Americans' Grocery Money, recently in " 5 Stocks Primed for Bigger Dividends."