Smart money selling big box retailers

Dow component Walmart Inc. (WMT) and other major department stores made headlines in the first quarter. The stock prices rose due to their command Market share At a time when retail competitors were struggling to survive. These stocks held their ground until mid-May, but purchasing power was unable to keep up with price movements, which is an indication smart money now takes profits and / or rebuilds Short sale Positions.

The accumulation deficit tells us that too short cover has driven most of the group up in 2020 rather than serious investors looking for long-term returns. This rocket fuel is no longer in play, and these stocks are now driving the slow rise of broad benchmarks that could stall at any time. The loss of this trading center could rapidly reduce these problems and trap late shareholders.

Walmart The stock was $ 110 in January 2018 and fell back to the low 80s in May. Price promotions within these limits led to an outbreak in June 2019 that made limited progress and was $ 125 in November. The stock sold to a nine-month low near $ 100 in March and rose significantly. Two rally waves hit the all-time high of April 20 at $ 133.38 before retreating on the 50 days exponential moving average (EMA).

The Total volume The Accumulation Distribution Indicator (OBV) tells a different story than the price movement and will reverse in October 2019 after it is reached resistance hit January 2018 high. It tested this level in February, dropped to a seven-month low, and returned to resistance on April 6, two weeks before the end of the rally. OBV has now fallen to the lowest low since August 2019 when the stock was trading almost 20 points lower.

Costco Wholesale Corporation (COSTS) The shares were trading at $ 245 in September 2018 and sold to $ 189 in the fourth quarter. A recovery wave of 2019 hit its previous high in April before an outbreak erupted in June that posted impressive gains to the February 2020 all-time high of $ 325.26. The stock then fell more than 50 points in just five sessions support at a seven-month low above $ 270. The subsequent rebound reached within one point of the previous high four days later, resulting in a fleeting bilateral action that has now settled about 15 points below the resistance.

OBV hit a new high one day before the stock’s all-time high in February and got into a persistent distribution phase that, despite lively price movements and a bullish look, reached lower highs and lows by mid-May Triangle pattern. This in turn is bearish Deviations indicates that Smart Money has used the repeated buying spikes to reduce long positions or open new short sales.

Target company (TGT) The shares were increased in the mid-1980s, which was slowed down by a data breach that became known and exposed millions of customer accounts. Attempts to rally in 2016 and 2018 failed, while the increase in July 2019 closed a multi-year year Cup and handle Breakout hit an all-time high of $ 130.24 in the last week of December. The stock then sold in a relatively simple correction pattern and hit a low near $ 90 in early April.

The price movement has made up for more than three quarters of the correction losses in the past six weeks, but OBV has barely moved and triggered a bearish divergence. The payout started at the same time the stock peaked, indicating that shareholders were steadily taking profits in the first quarter. Unfortunately, the rise has now found resistance at 0.786 Fibonacci clearance retracement Level, creating ideal conditions for a reversal and a steep retreat.

The bottom line

Big box retailers are trading near rally highs, but a constant sub-surface distribution suggests that smart money has been sold in these upward moves.

Disclosure: The author had no positions in the above securities at the time of publication.