Trade Idea WMT (Short)

Although this can be a straight equity trade, because the BETA is so low at .34, I would prefer an options trade for leverage on what is otherwise a solid set up.

 WMT broke clean from a solid uptrend on heavy volume and has since formed a bear flag. The obvious trade is a cross down below the bear flag, however as we have seen over and over, obvious patterns like this often get shaken out on a head fake move first. Be on the look out for a move above the top trendline of the flag, it may be a high probability/ low risk entry. Otherwise you can wait for a cross below the bear flag. A head fake move could all happen in one day so I would set some alerts fro a cross above and another alert for a cross below. If you don't have an alert system that is real time, email me.

 Money Stream has shown daily distribution since at least November so it most likely started before it showed up on the daily chart.

 The X-over screen identified one false crossover in white that was not confirmed, the recent one in red is confirmed and the first pullback is usually to the 10-day m.a. in yellow, so the head fake makes even more sense as a probability.

 The set up on a break below is a "show me " trade so it's a bit less risky. As you can see, yesterday we had a CandleStick Star (common reversal) in the downtrend, it was also on high volume making it a very likely reversal up (possibly for a head-fake shake out) and further more it happened right at the flag's support.

 The 60 min 3C chart shows as I suspected, this trend up looks like it has been under distribution most of the time, WMT is a big stock with a high market cap, positions are bound to be large and therefore take time to distribute, but it seems as if that phase is over and we are moving in to stage 4 decline.

 The 30 min chart shows the divergence before the breakdown and that the bear flag is almost ready to break as well with a negative divergence there.

 This short term 1 min chart shows the "bounce" that I showed above and the probability is that bounce will turn in to a head fake move.

The Trend Channel (2-day) has held the entire uptrend, so that would be my tightest stop I would use and only on a closing basis, the more room you give it initially, the better your chances are.

So look for a break above the $59.50 area as a warning of a shakeout and a possible trade there and another alert should be set for the $58.50-458.70 area, it depends on how long the break takes as the trendline is rising.

If you have questions, email me.