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Buy or Sell Walmart on Earnings? A Look at Its Key Levels

Walmart has been treading water for the last six weeks. Will earnings wake it up? Let's look at the chart ahead of the report.

Walmart  (WMT) - Get Walmart Inc. Report will report earnings on Tuesday before the stock market opens. 

The stock has been trading mostly flat over the past several weeks, so what should investors expect?

Walmart is flat since the beginning of April, which is an interesting observation in a market dominated by multiple cross-currents.

We’re seeing e-commerce and growth stocks getting annihilated right now. As one of the world’s largest retailers, Walmart obviously has a large e-commerce presence.

Walmart is a top-50 holding in the S&P 500 and a component of the Dow Jones Industrial Average but you would hardly realize it as these two indexes continue to hit new all-time highs while shares of the giant retailer continue to flatline.

It also comes at a time where other so-called anointed retailers like Home Depot  (HD) - Get Home Depot Inc. (The) Report, Target  (TGT) - Get Target Corporation Report and Costco Wholesale  (COST) - Get Costco Wholesale Corporation Report all continue to grind higher as well.

Will earnings be enough to wake up Walmart stock or will the quarterly report cause a flush lower?

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

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Trading Walmart

Weekly chart of Walmart stock.

Weekly chart of Walmart stock.

Most growth stocks hit an intermediate bottom in early March. So did Walmart stock.

In fact, the stock gave traders an excellent bounce off the 21-week moving average. After a solid rebound though, observers of the chart above now know what I mean when saying Walmart stock has been asleep for the last six weeks or so.

On the plus side, shares were able to reclaim the 10-week, 21-week and 50-week moving averages. For now it continues to hold these levels as support too.

However, it’s more of a mixed bag as we look at the $141 to $142 area and downtrend resistance (blue line). These measures continue to keep a lid on the stock price.

On a bullish reaction to earnings, I would love to see Walmart clear the $142 area and clear this month’s high at $142.74. Above that could pave the way to the $148 zone, which has been resistance, followed by the 2021 high that’s just shy of $150.

Above $150 and the all-time high up at $153.66 is in play.

On the downside, keep an eye on Walmart’s key weekly moving averages. Below puts last week's low on the table at $135.76. Below that could make things interesting, though.

Specifically, it could put the $128 to $130 support zone in play, as well as the 21-week moving average. As I mentioned earlier, the latter has been pretty solid support and I would expect it to provide a bounce to the stock price should Walmart decline to this area.