Technical Analysis

Two stocks to watch: WMT & BABA

By Antreas Themistokleous

22 May 2023

Wallmart Ali

Walmart’s weakening financials

Shares in Walmart, Inc. (WMT) managed to recover from the losses incurred in 2023 Q1 and is currently in a profit area close to the November 2022 high. The company is expected to report its earnings for the fiscal quarter (ending April 2023) on May 18, before the market opens. The current consensus Earning Per Share (EPS) is $1.30 (USD), showing no change since the same quarter of last year.

The company financials are prompting multiple caution signals. Net profit dropped by 15% year-over-year (as of 1 January 2023), while the assets-to-liabilities ratio dropped also from 1.51 to 1.46. On the financial statements, the drop indicates that liabilities are increasing in cost, while company assets are falling. Dividend yield is at the low area of 1.49%, while the payout ratio is at 53% which is neither bad nor good news for investors.

Wallmart chart

On the technical side, the price is trading in an aggressive bullish momentum and is currently testing the upper Bollinger band, which is acting as a price resistance at the time of this report.

The 50-day moving average is still above the 100-day moving average, validating the bullish trend. The $150 area is a strong technical support level as it consists of the psychological support of the round number. The 20-day moving average is also just below the 78.6% of the monthly Fibonacci retracement level.

The Stochastic oscillator is in the extreme overbought area, possibly indicating that a minor correction might happen before we see a continuation of the upward moving trend.

Baba shares fall since first quarter

Alibaba Group Holding Limited shares (BABA) didn’t perform well in the first quarter of the year, and are currently down 6%, compared to January 1, 2023. The company is expected to report its earnings for the fiscal quarter (ending March 2023) on May 18, before the market opens. The current consensus EPS is $0.92, compared to $1.45 from the same quarter of last year.

Cash reserves are looking healthy, with a current ratio of over 150%, meaning the company is more than able to cover its short-term liabilities with assets currently in possession. The total assets outweigh the total liabilities by more than 2 times. The total revenue for the trailing twelve months is higher than previous years, indicating that the company’s economic activities are growing, making its shares an attractive addition to any investor’s portfolio.


alibaba chart

From a technical analysis perspective, the share is approaching the end of the current triangle formation, which has been trading within its boundaries for the last 5 months. Even though the overall trend of recent months is bearish, there is some potential for a correction to the upside (in the short term) since the price managed to break above the 38.2% of the weekly Fibonacci retracement level.

If bullish sentiment continues in the coming sessions, then the first point of support could be found around the $90 mark, which consists of the psychological resistance of the round number, and is also the dynamic area of resistance between the 50% of the Fibonacci retracement and the 50-day simple moving average.

This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.


Antreas Themistokleous
Antreas Themistokleous

Antreas Themistokleous is a trading specialist in Exness. He is a Certified Financial Technician since 2018. As a member of the Society of Technical Analysts, Antreas is implementing advanced use of indicators and patterns to conclude in an action plan for different trading strategies.

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