Will This Delay Hurt Wal-Mart in its Battle Against Amazon?

Don't buy or sell Wal-Mart until you see this chart.

This week, we've seen several major announcements from Wal-Mart Stores (WMT). 

The world's largest retailer said earlier this week that the arrival of Wal-Mart+ would be delayed. That service is designed to compete with Amazon's Prime service. 

Will this news affect the stock's price? Let's go to the chart to find out. 

Wal-Mart. Chart by TradeStation

Wal-Mart. Chart by TradeStation

Shares of Wal-Mart could be on the verge of a major breakout. Over the past two months, the stock has formed a cup and handle pattern (black semicircles). That pattern projects the stock to the $150 area. 

Wal-Mart has tremendous support on its 200-day moving average (red line), currently located at $120.61. The stock had numerous bounces from that indicator (black arrows) in June and July. 

Wal-Mart's volume has been low for the past three weeks (shaded yellow). That's exactly what you'd expect for a stock that it is in consolidation mode prior to a major breakout. 

How will Wal-Mart+ compare with Amazon Prime? While there have been no official announcements, some details of the new service have leaked.

Priced at $98 annually, Wal-Mart+ will be cheaper than Amazon Prime, which costs $119 per year. Like Amazon Prime, Wal-Mart+ will offer same-day delivery service. 

So far, these two services look pretty similar, so where is Wal-Mart's edge? Wal-Mart plans to use its 5000 locations to leverage its new service, by offering in-store discounts to members. That's a perk that Amazon Prime currently can't offer. 

Bottom line: The delay of Wal-Mart Plus is not a major impediment for the stock.  

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Ed Ponsi is the managing director of Barchetta Capital Management, and is the author of three books for publisher Wiley Finance. A dynamic public speaker, Ed has made appearances around the world, in such diverse locations as Singapore, Dubai, London, and New York. For more information about Ed and his work, click here.