As We Approach Next Week's Earnings, Walmart is in Good Shape

Walmart Inc. (WMT) surged more than 5% last week, putting the retail giant back in the spotlight for technical analysts as it successfully closed the price gap created in February.

The recent rally reflects more than just short-term strength. On the daily chart, the Moving Average Convergence Divergence (MACD) indicator is showing positive momentum, while the weekly MACD has formed a bullish crossover a signal that the stock’s upward trend could have staying power.

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After underperforming the broader equity market since its April lows, Walmart is regaining relative strength versus the S&P 500 Index (SPX). The WMT-to-SPX ratio has climbed back above its 200-day moving average, reversing the short-term downtrend that began in the spring. This shift positions Walmart for potential outperformance in the near term, especially if bullish momentum continues.

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With Walmart scheduled to report quarterly earnings on August 21, traders are closely watching important price levels. If the stock can break through final resistance near $105, it would mark a clear resumption of its cyclical uptrend. Such a move could pave the way toward a short-term measured upside target of around $115.

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On the downside, major support sits near $94 an area reinforced by both the 200-day moving average and the weekly Ichimoku cloud model. This convergence of technical support could serve as a strong floor if the stock experiences any pullback.

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From a bigger-picture perspective, Walmart remains in a robust secular uptrend. The stock continues to trade above its rising monthly Ichimoku cloud, which trends higher through 2027. Monthly stochastics have also made a bullish “pop” higher, suggesting the potential for another upward leg in the long-term trend.

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That said, investors should temper expectations. The next rally phase is unlikely to match the strength of Walmart’s 2024 uptrend, as long-term upside momentum has cooled noticeably since the start of the year.

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This slowdown hints that the stock may be entering the later stages of its current cyclical advance. Additionally, the price is trading well above long-term secular support, indicating that a period of consolidation could eventually follow.

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In relative terms, Walmart’s technical profile looks favorable when compared to the SPX. The stock’s recovery above its 200-day ratio line signals improving comparative performance. This could draw renewed interest from portfolio managers seeking large-cap names with defensive qualities and technical setups that support further gains.

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Walmart’s recent price action checks several bullish boxes: short- and intermediate-term momentum are aligned to the upside, resistance is within striking distance, and long-term trend structures remain intact.

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While the stock’s longer-term momentum has softened, its ability to hold above key support levels while regaining relative strength against the broader market is encouraging for bulls.

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The upcoming earnings report on August 21 will likely be the next major catalyst. A strong earnings beat and optimistic guidance could provide the push needed to clear the $105 resistance level, potentially unlocking a run toward $115. Conversely, a miss or cautious outlook could send the stock back toward the $94 support zone.

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For traders and investors, the current setup offers a mix of opportunity and caution. Short-term players may see potential for a breakout ahead of earnings, while long-term holders can take comfort in Walmart’s established secular uptrend.

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Overall, Walmart’s technical landscape suggests the stock is well-positioned heading into earnings both on an absolute basis and relative to the S&P 500. While the rally may not reach the same heights seen earlier in 2024, the underlying trend remains supportive of additional upside, provided the company delivers solid results and maintains its momentum in the months ahead.

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