The outlook is a little less glowing over at retail giant Wal-Mart (WMT). That's because this $237 billion name is currently showing traders a descending triangle, the bearish opposite of the pattern in Xerox. Support for Wal-Mart currently comes into play at $72.50; if shares can't catch a bid above that price, then it's time to sell (or short) this big stock.
That doesn't mean a breakdown is a 100% foregone conclusion just yet. Shares slipped through $72.50 earlier this week, only to pop back into the pattern (the "bear trap" on the chart above). But a confirmed breakdown is certainly a sell signal.Whenever you're looking at any technical price pattern, it's critical to think in terms of those buyers and sellers. Triangles, and other pattern names are a good quick way to explain what's going on in a stock, but they're not the reason it's tradable. Instead, it all comes down to supply and demand for shares. That support level at $72.50 is a price at which there has been an excess of demand of shares; in other words, it's a place where buyers are more eager to step in and buy shares at a lower price than sellers were to sell. That's what makes a breakdown below that price so significant -- the move would indicate that sellers are finally strong enough to absorb all of the excess demand at that price level. Wait for that indication before you sell.
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