Just an fyi for those who were planning to exit the WMT short trade at the first target, the stock has hit and slightly exceeded T1 in pre-market trading today. My preferred swing target on this trade is T2. I’ll post an updated chart after the market opens but until then, here’s my previous post on the trade, which is a great example of how the pump-n-dump game is played when distributing a stock to the dumb-money at the top:
October 10,2012: as the game never ends, wally world’s CEO came out with some bullshi, i mean bullish statements of how rosy the future looks for WMT, undoubtedly as a ploy to break the stock out to new highs as it has been unable to do so on it’s own for months now. regardless of my fundamental belief that a retail company will not be able to flourish as the economic downturn continues to build momentum, my technical take on the stock remains the same: WMT is extremely overbought on multiple time frames all the way out to the weekly and even monthly charts. significant negative divergences persist on nearly all time frames as well, greatly increasing the odds that any upside potential on the stock from current levels is significantly overshadowed by the risk of a substantial correction.
in my last update on this trade, i did mention a move over the recent highs as an objective stop level which would put a very tight loss allowance on this trade. if you are using that stop criteria, you might consider waiting for a solid close above that level (or cover just before 4pm ET if it looks like the breakout will stick). i also mentioned previously that i am personally allowing a larger stop allowance of about 6-8% above entry on my position, which would be around the 79.25 area. in fact, i will likely add to my position if/when this “bullish” breakout today fails (a move back below the 75 area) as i believe the odds favor a bull-trap in WMT. as always, DYODD and use stops that are commensurate with your own risk tolerance and trading style.