Walmart (WMT)

[kennynah]

05 Jun 2008 11:24 GMT
US DATA: Retailer reports are coming in, Wal-Mart reports same-store
sales +4.0% YOY in May with and without fuel.

dow futures promptly gained +20points

[blid2def]

Cross-posting MM's post here:

Wal-Mart's Sales Slowdown May Signal End of Best-of-Dow Run
By Chris Burritt

Aug. 8 (Bloomberg) -- Wal-Mart Stores Inc.'s run as this year's best-performing Dow Jones Industrial Average company may end after the world's largest retailer said sales growth will slow this month.

Wal-Mart declined 6.3 percent yesterday, the steepest drop since 2002, after it said sales in stores open at least a year may rise as little as 1 percent, which would be the smallest gain in five months. The company said most shoppers had spent the U.S. tax rebates that spurred sales.

``The stock has risen a lot, and the probability is pretty low that it keeps growing at that rate,'' Don Yacktman, who oversees $900 million at Yacktman Asset Management Co., said in an interview. The Austin, Texas-based firm sold 80,000 Wal-Mart shares, or half of its holding in that stock, since April.

Wal-Mart had climbed 28 percent this year before yesterday, compared with the 30-company Dow's 14 percent drop. After yesterday's decline, Bentonville, Arkansas-based Wal-Mart had a gain of 20 percent, just ahead of International Business Machines Corp.'s 19 percent increase.

Chief Executive Officer H. Lee Scott and Eduardo Castro- Wright, the U.S. stores chief, weren't available for interviews before quarterly earnings Aug. 14, Wal-Mart spokesman John Simley said yesterday.

Spending of tax rebate checks, part of the government's attempt to rejuvenate the economy, helped produce Wal-Mart's biggest same-store sales gains of the year in May, with a 3.9 percent increase, and June, with a 5.8 percent jump.

Steep Discounts

The company lured shoppers battered by soaring gasoline and food costs with $4 prescriptions and discounts on groceries and flat-screen televisions as steep as 30 percent.

Total sales in the first half of the fiscal year that started Feb. 1 climbed 9.6 percent. Total sales in July increased 9.4 percent.

``We are seeing the end of a catalyst,'' Lauri Brunner, a Minneapolis-based analyst for Thrivent Asset Management, said yesterday in a Bloomberg Radio interview. Thrivent manages $73.2 billion in assets, with 1.5 million Wal-Mart shares through June.

``August represents even further deceleration,'' Mark Miller, an analyst with William Blair & Co., wrote yesterday in a note to clients. Wal-Mart's forecast of same-store sales growth of 1 percent to 2 percent this month trails his third- quarter estimate of 2.5 percent.

Miller cut Wal-Mart to ``market perform'' from ``outperform'' yesterday on the view that the retailer's sales and profit growth will slow.

Off Course

Investors had put the shares on course for their biggest annual gain in nine years. The stock, still headed for its best performance since 1999, is unlikely to duplicate its first-half gains, said Jeffrey Malcom, a portfolio manager at Horan Capital Management.

Reflecting the skepticism about the shares, more stock had been sold short last month than at any time this decade. Short sellers borrow stock to sell in the hopes of buying the shares back later at a cheaper price.

Wal-Mart may advance 12 percent in 12 months, based on the average of analyst target prices compiled by Bloomberg. That compares with the 20 percent average share-price gain predicted for the companies traded on the Standard & Poor's 500 Retailing Index.

``As they get bigger in the U.S., they're going to have to look elsewhere for growth, which is no easy feat,'' Yacktman said in the Aug. 6 interview.

Domestic Dependence

Wal-Mart generates 24 percent of sales overseas, leaving it reliant on the U.S. while it slows construction of supercenters that sell groceries and general merchandise. The retailer said in June it plans to increase square footage of stores by 5 percent to 6 percent this fiscal year, down from 7.7 percent growth last year.

Yesterday's decline may present a chance to invest in a stock that is still valued at less than Costco Wholesale Corp., whose shares trade at 23 times earnings, compared with Wal- Mart's 16 times.

``I would be a buyer on this weakness,'' David Abella, a portfolio manager at Rochdale Investment Management LLC in New York, said yesterday in a Bloomberg Television interview. The firm manages $2.5 billion, including Wal-Mart shares.

Wal-Mart is positioned to grab ``frugal consumers'' with discounts, better stores and improvements in merchandising of clothing and home fashions, said Bill Dreher, a Deutsche Bank Securities Inc. analyst in New York. He is one of 19 analysts who recommend buying the stock. Seven rate the shares ``hold,'' and one says ``sell.''

`Retrenching'

``Wal-Mart was in the right place when the consumer started retrenching, and some consumers are still switching to its stores,'' said Rick Jones, an analyst at Durham, North Carolina- based NCM Capital Management Group Inc. ``But the valuation of the stock reflects that.''

NCM, which has $3 billion under management, sold 335,826 Wal-Mart shares in the second quarter, leaving it with 631,600 shares.

Towson, Maryland-based Horan, with assets of $450 million, has sold all but 50,000 of its 370,000 Wal-Mart shares since the fourth quarter. It's buying shares of Home Depot Inc. and Lowe's Inc., the two biggest home improvement chains, which have reported lower profit since last year because of the U.S. housing slump.

``As Wal-Mart took off, others fell down around it,'' Malcom said. Home Depot and Lowe's ``are much more beaten up and a better home for the money.''

[blid2def]

And WMT's chart looks... like this:

http://stockcharts.com/h-sc/ui?s=WMT&p= ... =146622551

[iam802]

beautiful chart.

1. look at last 3 periods breakout.
- good volume
- new high since 2006(?)

2. chikou span (green line lagging behind)
- all the way clear to rise as high as it wants

3. support (use Kijun-sen as cut lost?)
- $58.20 (possible?)

Note: Take it with a pinch of salt (cos' I anyhow say...school never teach mushroom reading)

[blid2def]

Hehe, for this case, I post unconventional TA indicators (mushrooms) but I use conventional TA indicators as guide. Hahahhaa...

My thinking at first glance was:

Conventional TA:
1. Wahlao, rectangle! Rectangle = 大好大坏 (surge or tank). Either side can breakout... notice it broke out 3 sessions ago, then last night bend back, together with the general market.

2. The price is sitting on a 9-month support trend line.

3. Ranged trading from 56 - 59 until it breaks out of the rectangle. Which way? Anybody's guess.

Mushroom:
I find this sort of charts one of the hardest to determine.

1. The Kijun-sen (red) is flat - and has been flat for a long time - since beginning of June. If you recall from the IKH website, a flat Kijun-sen represents equilibrium, and stock prices tend to seek equilibrium. Next, the Kijun-sen also has a "rubber band" effect on prices, which means that upon reaching equilibrium, prices will bounce off (either up or down).

2. We have a strong resistance line at 59.80 and a strong support line at 55.80. The result is that the price hits one end, comes back to equilibirum, bounces, hits another end, comes back... end up - matching the rectangle chart pattern in conventional TA.

3. From end Jun to end Jul, the price spent a fair bit of time in the kumo cloud - a region of "directionless-ness". It is generally regarded as unsafe (theory lah haha) to trade when prices are in the cloud.

So how???
In situations like these (and in most situations when I use IKH anyway), I turn to the weekly chart for guidance:
http://stockcharts.com/h-sc/ui?s=WMT&p= ... =146622551

Here now, we can see the bullish crossover and subsequent confirmation back in early 08. Other than that though - no new clues also... So, I go further out... look at monthly chart (hahaha yeah a bit ridiculous liao):
http://stockcharts.com/h-sc/ui?s=WMT&id ... istNum=21#

Again, see the nice crossover and confirmation in Jan 08. But not anymore clues though.

Eh... means????
So, what's the conclusion? I won't trade it now, but I'd pay attention to what happens in the next few days / weeks. In this particular case, IKH might not be able to give a good guide on the trend - the support/resistance lines are still good. So, may need to rely on conventional TA a bit. There was an abnormally larger no. of 60 CALLS (I think Jan 09 CALLS) being traded a few nights back though.

Gut-feel? Dunno which direction. Hahaha... but I feel that the rectangle is very powerful. There were a couple of recent examples I found; I forgot one of them, but here's one:

FPL: http://stockcharts.com/h-sc/ui?s=FPL&p= ... =146350696

EDIT: And before anyone asks... as usual, I spot a few stocks, and pick and trade the wrong ones. Hahahahaha... KNN head bang wall.

[iam802]

good points on the rectangle.

did not know that. going to burn more mid-night oil.

thanks

[blid2def]

Some info here on rectangles:

http://thepatternsite.com/recttops.html
http://thepatternsite.com/rectbots.html

The author of the site, Tom Bulkowski has an encyclopedia of chart patterns; claims to have studied dunno how many charts to compile statistics on probabilities of breakout, failure, blah blah. I think he must have very thick glasses.

[iam802]

just got an updated chart. close down yesterday but still within the trading range that you highlighted.

[millionairemind]

This should help the market today

Wal-Mart profit climbs 17%, ups 2008 goal
By Andria Cheng, MarketWatch

Last update: 6:43 a.m. EDT Aug. 14, 2008Comments: 39NEW YORK (MarketWatch) -- Wal-Mart Stores Inc. on Thursday reported a 17% profit rise in second-quarter profit and upped its annual earnings goal as bargain-hunting shoppers, hurt by the rising cost of food and gasoline, flocked to the retailer's stores known for their low prices.

Net income at the world's biggest retailer rose to $3.45 billion, or 87 cents a share, compared to $2.95 billion, or 72 cents a share a year earlier, the Bentonville, Ark.-based retailer said. The quarter included a penny a share gain on resolving a tax contingency.
Revenue rose to $102.67 billion from $93 billion.

Analysts, on average, estimated Wal-Mart would earn profit of 83 cents a share on sales of $101.8 billion, according to analysts surveyed by FactSet.

Full story
http://www.marketwatch.com/news/story/w ... 2C940C9%7D

[winston]

Wal-Mart Stores Inc., the world's largest retailer, said profit this year may rise more than it forecast after the fastest sales growth in more than a year drove second-quarter net income up 17 percent.

Full-year profit may increase to as much as $3.50 a share, exceeding some analysts' estimates, as consumers grappling with higher food and gasoline costs spend more on lower-priced medicine and groceries, Wal-Mart said today.

Sales at stores open at least a year climbed 4.5 percent in the quarter, the most since 2004, spurred by tax-rebate checks and the retailer's lowered prices on cereal and shampoo.
"When consumers have to tighten their spending, they trade down," Jason Pride, research director at Haverford Trust Co., told Bloomberg Television. "In order to trade down, they have to shop more at a Wal-Mart."

– Bloomberg