As Walmart prepares to release its earnings report tomorrow, the retail giant's stock is drawing significant attention. Currently, in the pre-market, Walmart shares are trading at $84.72, marking a remarkable 62% gain year-to-date. Here's a breakdown of the key technical and market factors investors should consider ahead of this pivotal event.

Current Stock Performance and Key Levels

On the weekly chart, Walmart's stock price is positioned near the upper end of a trading channel, where the upper trendline is acting as resistance. This level has become a near-term barrier, making a decisive breakout contingent on the upcoming earnings results.

• Bullish Scenario:
  A breakout above the trendline could propel Walmart’s stock toward the $90 level, contingent on strong earnings and guidance. Breaking past $90 without a significant pullback would signal bullish momentum, potentially opening the door to a rally toward $100 per share, a further 18% increase from current levels.

• Bearish Scenario:
  If earnings fail to impress, or if broader market headwinds persist, the stock could see a pullback. Key support levels to watch include $81-$82, with a deeper correction potentially driving the price toward $76-$77, or even the trendline support near $74.

Technical Indicators Highlight Overbought Conditions

From a technical perspective, indicators suggest caution in the near term:

• MACD:
  The MACD volume has decreased, and the MACD line is nearing its signal line, indicating a loss of recent momentum.

• RSI:
  The Relative Strength Index (RSI) has remained in overbought territory since May, which could prompt investors to lock in profits ahead of the earnings report.

Seasonal and Fundamental Factors to Watch

Seasonal trends in November and December could provide a tailwind, but the stock’s next move largely hinges on the earnings report and management’s guidance. Investors will closely analyze whether Walmart can sustain its growth trajectory and capitalize on the holiday season.

Conclusion

Walmart’s stock is at a critical juncture as it approaches its earnings announcement. While the potential for a breakout above $90 exists, overbought technical indicators and the importance of strong earnings suggest that investors should remain cautious. A failure to deliver on expectations could lead to a retracement, with key support levels coming into focus. Keep an eye on the stock’s technical levels and market sentiment following the earnings report to gauge its next move.