Walmart Can Hit Records as It Takes On Amazon - Here's How

Walmart is going head to head with Amazon with its Walmart+ service. Here's how the WMT stock charts look after the Tuesday rally.
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Walmart  (WMT) - Get Report shares are bouncing, trying to find some direction on Wednesday after Tuesday’s near 7% rally. 

The stock surged on Tuesday on reports of its Walmart+ service.

The $98-a-year service is being viewed as competition with Amazon  (AMZN) - Get Report Prime and will offer perks like same-day delivery for groceries and general merchandise, fuel discounts and early access to deals.

Will it be enough to disrupt Amazon? Probably not. It seems more like a blend of Prime and a Costco  (COST) - Get Report membership, although Amazon and Costco are both considered premier companies in the stock market.

While Walmart+ may not dethrone Amazon Prime, it may at least create a source of renewable subscription-like revenue for the business. In that event, it could be a win for the stock’s valuation — and its share price.

Costco and Amazon are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells COST or AMZN? Learn more now.

Trading Walmart Stock

Daily chart of Walmart stock.

Daily chart of Walmart stock.

The rally came at a perfect spot, as Walmart stock continued to hug the 200-day moving average.

The price action leading up to Tuesday’s burst wasn’t that impressive: The shares were trapped under downtrend resistance (blue line) but they continued to hold support along this key moving average.

On the move higher, the shares not only broke out over downtrend resistance, they also reclaimed the 20-day and 50-day moving averages. 

Walmart stock also closed above $126, a key level over the past few months and one that serves as the 78.6% retracement.

Finally, the rally came on robust volume, with more than 31 million shares changing hands. 

It was the highest-volume day in almost two years, following an earnings-inspired gap up that fueled the shares higher by more than 9% in a single session.

In any regard, the bulls are buying Wednesday’s dip. Now look to see that the stock holds the $126 area and the session’s low at $125.12. A close below puts the 50-day moving average in play.

Over $126 increases the likelihood that Walmart continues higher, potentially to the $132 area. This level marks the 2020 highs and was resistance in April and May.

Clearing $132 could put $140 in play on the upside, which is the 123.6% extension from the March low to the April high.