Wal-Mart Stores (WMT) shares are showing bullish signs as the Chaikin Money Flow or CFI is above the zero line. A positive Chaikin Money Flow indicates that the stock is strong while a negative CMF indicates that the stock is weak. The CMF indicator passing through the zero line (rising above or falling below) may indicate a shift in the overall trend for the equity. The indicator, created by Marc Chaikin, is based on the theory that the strength of the market can be determined by looking at where the price closes compared to its daily range and volume. If the market is strong you will see if closing in the upper half with a high volume. A weak market can be seen if it closes in the lower half of the range on high volume.
Taking a deeper dive into the numbers, Wal-Mart Stores (WMT) has a 50-day Moving Average of 101.69, the 200-day Moving Average is 97.79, and the 7-day is noted at 105.08. A popular tool among technical stock analysts is the moving average. Moving averages are considered to be lagging indicators that simply take the average price of a stock over a specific period of time. Moving averages can be very useful for identifying peaks and troughs. They may also be used to help the trader figure out proper support and resistance levels for the stock.
Investors might be looking into the magic eight ball trying to project where the stock market will be heading over the next few months. Some analysts believe that the market is ready to take a bearish turn, but others believe that there is still room for stocks to shoot higher. When the markets do have a sell-off, investors may be tempted to sell winners before they give up previous profits. Sometimes this may be justified, but other times this type of panic selling can cause investors to just have to repurchase shares at a higher price after the recovery. Keeping tabs on the underlying company fundamental data can help provide the investor with a better idea of whether to hold on to a stock or let it go.
Traders may be relying in part on technical stock analysis. Wal-Mart Stores (WMT) currently has a 14-day Commodity Channel Index (CCI) of 174.22. Despite the name, CCI can be used on other investment tools such as stocks. The CCI was designed to typically stay within the reading of -100 to +100. Traders may use the indicator to determine stock trends or to identify overbought/oversold conditions. A CCI reading above +100 would imply that the stock is overbought and possibly ready for a correction. On the other hand, a reading of -100 would imply that the stock is oversold and possibly set for a rally.
At the time of writing, the 14-day ADX for Wal-Mart Stores (WMT) is 21.76. Many technical chart analysts believe that an ADX value over 25 would suggest a strong trend. A reading under 20 would indicate no trend, and a reading from 20-25 would suggest that there is no clear trend signal. The ADX is typically plotted along with two other directional movement indicator lines, the Plus Directional Indicator (+DI) and Minus Directional Indicator (-DI). Some analysts believe that the ADX is one of the best trend strength indicators available.
The Relative Strength Index (RSI) is one of multiple popular technical indicators created by J. Welles Wilder. Wilder introduced RSI in his book “New Concepts in Technical Trading Systems” which was published in 1978. RSI measures the magnitude and velocity of directional price movements. The data is represented graphically by fluctuating between a value of 0 and 100. The indicator is computed by using the average losses and gains of a stock over a certain time period. RSI can be used to help spot overbought or oversold conditions. An RSI reading over 70 would be considered overbought, and a reading under 30 would indicate oversold conditions. A level of 50 would indicate neutral market momentum. The 14-day RSI is currently sitting at 73.97, the 7-day is at 86.50, and the 3-day is spotted at 97.61 for Wal-Mart Stores (WMT).
Once the individual investor has done all the fundamental homework and found a few stocks that they think are poised to be future winners, they may want to figure out when to best get into the market. Many investors will turn towards technical analysis to accomplish this. Technical analysis can help identify entry and exit points by studying price trends and movements over time. Some technical indicators are very complex and others are very simple. One goal of focusing on technical indicators is to help make confusing price information easier to interpret and understand. Many investors will find signals that they like to follow, but focusing on just one indicator may not provide the full picture of what is really going on. Many investors will combine technical indicators to help round out the spectrum. Although technical analysis can be a very useful tool for the investor, it is important to remember that stock prices are inherently unpredictable. Even the most seasoned investors may have to adjust their charts occasionally if trades are not working out as planned.
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