Walmart (WMT) - Get Report has recovered nicely from this morning's steep selloff. After beginning the session with a huge downside gap, the stock rebounded, pushing shares to new highs for the month. The stock is fading a bit as the session draws to a close but is still well above the lows. Walmart is currently off 17 cents, or 0.2%, at $71.93.
After exploding off the May 18 low, Walmart ran out of steam as it approached the epic breakdown gap left behind back on Aug. 18 of last year. The stock began a narrow consolidation pattern as it digested the huge 12% post-earnings ramp. During this process, the stock held key support near the April highs while giving back very little of the May gains.
Heading into today's session, the stock was on a nice run and appeared headed for an upside resolution of the four-week range. Yesterday's slight gain pushed the stock above the heavy resistance zone near last August's breakdown gap of $71.75. Even after the opening flush, Walmart remained above last week's low. Investors should be very encouraged by this divergent action.
Walmart's strength today confirms the $70.50-to-$70 area as a major support zone. The stock is leaving this area behind as this week comes to a close, putting it on course for more upside. In the near term, Walmart bulls should consider the stock a buy on weakness until the $70 area is clearly taken out. An logical upside target is the 2015 summer peak near $74.15.
Disclosure: This article is commentary by an independent contributor. At the time of publication, the author was long WMT.