Let's check out the price action and the trends. Wal-Mart daily chart (below). WMT is down 10% this afternoon.
This latest drop on heavy volume brings WMT to a new 3-year low, as the stock hits levels not seen since mid 2012. As you'll note from the monthly chart I shared earlier this week on Twitter, WMT has fallen back into its decade-long trading range, below $70.
$WMT Walmart coming off 3-year lows. Pull the chart back to 1995... back into that decade-long trading range. pic.twitter.com/NbZItNWm6G— David Shvartsman (@FinanceTrends) October 13, 2015
We first highlighted Wal-Mart's drop and retail weakness back in August. See the chart + tweet below.
Wal-Mart $WMT slips to a 3-year low. This follows recent weakness in Kohl's $KSS, retail. pic.twitter.com/gAIdSEejNv— David Shvartsman (@FinanceTrends) August 18, 2015
Today's plunge is in line with the downtrend in place since early 2015. After making new highs above $90 in January, Wal-Mart (WMT) failed to hold above the $80+ level. The stock slipped below its 50 and 200 day moving averages in the spring of 2015 and has continued lower.
"Successful traders always follow the line of least resistance. Follow the trend. The trend is your friend!" - Jesse Livermore (Hat tip: Olivier Tischendorf, Chris Perruna).
Of course, Wal-Mart's increased spending costs and flat sales come against the backdrop of its longer-term fight with dominant online rival, Amazon. As we increasingly shift to a world of online shopping, big box retailers like Wal-Mart and Target must invest to compete online with Amazon.
Meanwhile AMZN is trading nearer to its all-time high. Amazon's $255 billion market cap now handily exceeds Wal-Mart's $193 billion market cap. While Amazon's stock (AMZN) has increased more than 400% over the course of this bull market, Wal-Mart (WMT) has, as of today, only managed a gain of 20% since 2009.
Wal-Mart's huge growth phase (click the WMT chart to see its 30-fold rise during the 1980s and 1990s) has given way to maturation. Currently, up-and-coming, or dominant, online retailers like Amazon are enjoying their moment in the stock market's sun.