Walmart’s Disappointing Outlook May Sink Stocks On July 26

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7/25/22

STOCKS – WMT, TGT, AMZN

MACRO – SPY, VIX

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The market had an uneventful day, with the S&P 500 trading up 13 bps. We have traded between 3,885 and 4000 since July 20, and we may have to wait until Wednesday for the market to decide what it wants to do.

There does appear to be a head and shoulder pattern on the Intraday chart, with the potential for a gap fill down at 3,830, but that will depend on how the market is feeling tomorrow and Wednesday. Walmart cut its profit outlook after the close, citing strong sales due to higher prices, but that food inflation is in the double digits and higher than in the first quarter. Walmart and many of the retailers are trading lower following the news.

Walmart had recovered much of its losses following results last quarter. But now with the stock trading back down to around $120 in the after hours, investors need to again be on watch for support at $117. That was the critical level last time and will be again this time. Below $117, the stock would have to fall back to around $103 to find support.

Target (TGT)

Target is trading down more than 6% to $148. Like Walmart, the stock has recovered nicely over the past few weeks, and at least $148 still has a distance to go before returning to its prior lows after filling the gap at $137.

Amazon (AMZN)

Amazon is trading down around 4%. The stock has a few gaps that need to fill around $113 and then again at $110. Additionally, the RSI is in a significant downtrend, with a series of lower highs, indicating the shares are likely to continue to trend lower.

VIX

Finally, our good friend, the VIX, managed to creep higher to close at 23.35. Not much to add here, but the level of complacency in the market still seems somewhat bizarre. Maybe the Walmart news changes that tomorrow; perhaps it doesn’t. If the VIX closes above its 10-day exponential moving average tomorrow, that would be interesting.

Have a good one.

Mike

Charts used with the permission of Bloomberg Finance L.P. This report contains independent commentary to be used for informational and educational purposes only. Michael Kramer is a member and investment adviser representative with Mott Capital Management. Mr. Kramer is not affiliated with this company and does not serve on the board of any related company that issued this stock. All opinions and analyses presented by Michael Kramer in this analysis or market report are solely Michael Kramer’s views. Readers should not treat any opinion, viewpoint, or prediction expressed by Michael Kramer as a specific solicitation or recommendation to buy or sell a particular security or follow a particular strategy. Michael Kramer’s analyses are based upon information and independent research that he considers reliable, but neither Michael Kramer nor Mott Capital Management guarantees its completeness or accuracy, and it should not be relied upon as such. Michael Kramer is not under any obligation to update or correct any information presented in his analyses. Mr. Kramer’s statements, guidance, and opinions are subject to change without notice.Past performance is not indicative of future results. Neither Michael Kramer nor Mott Capital Management guarantees any specific outcome or profit. You should be aware of the real risk of loss in following any strategy or investment commentary presented in this analysis. Strategies or investments discussed may fluctuate in price or value. Investments or strategies mentioned in this analysis may not be suitable for you. This material does not consider your particular investment objectives, financial situation, or needs and is not intended as a recommendation appropriate for you. You must make an independent decision regarding investments or strategies in this analysis. Before acting on information in this analysis, you should consider whether it is suitable for your circumstances and strongly consider seeking advice from your own financial or investment adviser to determine the suitability of any investment.