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PreMarket Prep Stock Of The Day: Walmart

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action fo

Benzinga · 05/19/2020 21:23

Benzinga's PreMarket Prep airs every morning from 8-9 a.m. ET. During that fast-paced, highly informative hour, traders and investors tune in to get the major news of the day, the catalysts behind those moves and the corresponding price action for the upcoming session.

On any given day, the show will cover at least 20 stocks determined by co-hosts Joel Elconin and Dennis Dick along with producer Spencer Israel.

For those who don't have the time to tune in live or listen to the podcast, Benzinga will highlight one stock that merits further discussion. This analysis is not a buy or sell recommendation.

Earnings season for retailers kicked off with Walmart Inc (NYSE: WMT). Its price action was discussed on Tuesday's PreMarket Prep Show, making it the Stock Of The Day.

It has been evident that during the stay-at-home policy instituted across the globe, people have no choice but to eat at home and need the necessary supplies to do so. With Walmart already being the choice of millions for grocery and other needs, they simply increased the size and frequency of their purchases.

For other consumers that were forced to alter their eatings habits, Walmart was an obvious low-cost and convenient alternative.

The Trend Is Your Friend

When discussing issues to own and not own during the market meltdown, one thing we constantly emphasize on our show is what was the trend in an issue before the crisis began to unfold.

There is no doubt Walmart has participated in the bull market after having a rough year in 2015, falling from its January high of $90.97 to $56.30 in November before rebounding to end the year at $61.30.

Since its year-end 2015 close, WMT doubled when it peaked in April at $113.38.

On Sale In March

Walmart was already in retreat mode in January from its November 2019 all-time high ($125.38), when the market meltdown accelerated the decline. It finally found a bottom a few days ahead of the broad market on March 16 at $102. That low coincided with its June 2019 low of $101.40.

Off that low, it rallied back with the broad market, finally peaking on April 20 at $133.38 for a healthy 31% gain for a normally stodgy stock.

PreMarket Prep Call: Sell The News

Before today's open, the company announced a first-quarter EPS beat of a penny along with a huge sales beat of $4.39 billion. The algos feasted on the sales beat, driving the issue from Monday's close $127.66, beyond its all-time high to $133.91 and reversed course.

When being discussed on the show, co-host Dennis Dick was hands off on the buy-side.

"There is a chance the issue will not revisit its pre-market high or even its current all-time high as it drifted lower since it peaked off the release," he said.

Moving Forward

As it turns out, the issue peaked just after its higher open at $131.99 and drifted lower but has yet to reach Monday's close ($127.66) as $127.70 stands as the low for the session at time of publication.

For investors long the issue and not selling today's strength, today's closing price should be a good barometer to determine its post-earnings move. Holding that level may indicate a retest of the all-time high, while not holding that level, may reinforce today's "sell the news" price action.

Photo credit: MikeMozartJeepersMedia, via Wikimedia Commons