Retail Companies Initially Selling Off When Walmart Cut Profit Forecast for Q2. Maybe the Live Earnings Call in the Future Can Turn This Around?
Walmart decreases future profit forecasts due to food and fuel inflation. This sent their share price tumbling after hours during the release of this news. Obviously food and fuel places have been dropping on the commodities markets. So will they have this same problem in the future? Will inflation continue to climb? Maybe we can get more insight during the live conference call for their earnings report.
Just look at the sell-off after hours in Walmart's chart directly below.
Just look at the sell-off after hours in Walmart's chart directly below.
Very few retail names are safe from the Carnage. Just look at these big names in these charts below that are suffering some of the backlash from Walmart's press release. $Amazon (AMZN.US)$ $Target (TGT.US)$ $Shopify (SHOP.US)$ $Dollar Tree (DLTR.US)$ $Nordstrom (JWN.US)$ $Etsy Inc (ETSY.US)$ $Upbound Group (RCII.US)$
It looks as if the market is still providing very negative reactions to companies mentioning inflation affecting their future guidance. If inflation continues to rise we can expect this trend to continue.
It looks as if the market is still providing very negative reactions to companies mentioning inflation affecting their future guidance. If inflation continues to rise we can expect this trend to continue.
On days like this when you get after hours earnings reaction and an entire sector is affected I like to change up my daily watch list for the following day. A big chunk of my watch list is now mainly these retail tickers you can see below. I will be watching these ticker symbols for a continuation to the downside. And I will be watching them for a bounce back up if they do come down to a lower support level.
So far this is most of my watch list for tomorrow. It includes a lot of the retail names that have had big after hours moves including a couple sector ETFs and one leveraged ETF. $SPDR S&P Retail ETF (XRT.US)$ $Consumer Discretionary Select Sector SPDR Fund (XLY.US)$ $Direxion Shares Etf Trust Retail Bull 3X Shs (RETL.US)$
So far this is most of my watch list for tomorrow. It includes a lot of the retail names that have had big after hours moves including a couple sector ETFs and one leveraged ETF. $SPDR S&P Retail ETF (XRT.US)$ $Consumer Discretionary Select Sector SPDR Fund (XLY.US)$ $Direxion Shares Etf Trust Retail Bull 3X Shs (RETL.US)$
In the chart directly below I have highlighted the short-term major support levels by the bold purple and orange trend lines. These are short-term supports so they are weaker than the longer-term support levels but we could possibly expect a bounce here. If we go below here then we will be in an area we have not been since before the pandemic.
Below you can see an illustration of how Walmart is about to dip below its share price's value from before the pandemic. A very long-term investor loves big discounts like this.
$SPDR S&P 500 ETF (SPY.US)$ $Invesco QQQ Trust (QQQ.US)$ $SPDR Dow Jones Industrial Average Trust (DIA.US)$ $VIX Index Futures(DEC4) (VXmain.US)$ $SSE Composite Index (000001.SH)$ $Hang Seng Index (800000.HK)$ $CSI 300 Index (000300.SH)$ $S&P/ASX 200 (.XJO.AU)$ $FTSE Singapore Straits Time Index (.STI.SG)$
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Mike Hunt : I don’t think there was any earnings announced so not sure why there would be a call. They just came out of nowhere to cut guidance I think. Is there a call?
Violets : have to run right now and do some errands but really looking forward to reading this when I get back
SpyderCall OP Mike Hunt : dang I think you're right all these headlines look like an earnings call but I don't see an actual earnings report. damn I'm really going to have to edit this
SpyderCall OP Mike Hunt : thanks for pointing that out. let me correct this before I look like an idiot
SpyderCall OP Mike Hunt : Mike Hunt coming in clutch. I appreciate it I had a few typos as well.
SpyderCall OP Mike Hunt : but just look at all those after hours headlines about walmart. and then the price action after hours. it is very reminiscent of the recent bad earnings report
SpyderCall OP Violets : I had to make a few corrections. it looks like an earnings release but it was just a regular press release that brought the retail sector down. you might still find some good insight in the post though
Mike Hunt SpyderCall OP : The “in sympathy” movement to me is an arbitrage opportunity. Similar to NCLH going down when CCL announced offering last week. Costco is not like Walmart and target. It also happens with Roku often. Roku is the platform streamers are on, not really a streamer themselves. There’s no subscription to be on Roku so when they get hit by Netflix and Snap BS, it’s way off base.
SpyderCall OP Mike Hunt : you're absolutely right about the arbitrage opportunity. that's why I was considering Target or Amazon. I remembered in the past it was either Target or Walmart released a headline or earnings report that brought retail down. the next day basically most of retail jump back up except for that Target or Walmart because of the press release. so arbitrage is always a possibility off of headlines like this if we will continue this uptrend that spy seems to be in for the past several weeks. but I was also looking at this trending parallel price channel on spy. currently we're at the top of it near resistance and on the very short-term 1 hour candles there is a slight head and shoulders formation with a tight neckline. I'm concerned that this press release could be the catalyst to keep spy within this range of this price channel
Mike Hunt : And like I mentioned to you last week about why didn’t carnival do an offering in April at double the SP indicating something really serious underlying the decision to pull the trigger now, this preemptive Walmart move (similar to snap a couple months ago), really has me wondering if inflationary and recessionary headwinds are WAY more radical than we are made to believe. Hell, we have a White House trying to change the definition of what a recession is. Something stinks.
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