Three Stocks: Walmart, Bitcoin, and Coinbase

Walmart

Shares of retailing giant Walmart (WMT) were 7% higher on Thursday after the company reported earnings that were better than Wall Street expectations.

The company beat its earnings per share target by $0.07, growing revenue by 6% over last year’s numbers, but the real story was in comments made by management.

Walmart’s earnings numbers were driven by a growing number of shoppers looking for better deals, including more high-income shoppers as consumers continued to look for ways to stretch their spending dollars in the current high inflation economy.

The shift of high-income shoppers to discount retailers is a trend that we’ll discuss in tomorrow’s Money Morning Buzz as it poses a threat to the broader economy.

Walmart’s price shot higher after more than a month of trading in a tight price range, triggering a bullish volatility surge.

The break above $60 represents a move to new high territory that is likely to fuel a follow-through rally to $75 over the next 3 months.

Bitcoin 

Bitcoin (BTC) is shifting into another bullish breakout as the cryptocurrency notched its second daily close above its 50-day moving average.  The shift suggests that the “risk on” traders are prepared to follow through on their bullish forecasts on the heels of this week’s CPI report.

The strike above its 50-day moving average also moved Bitcoin above the $65,000 price level, a mark that has become the site of selling pressure since the beginning of May.

Due to the sideward movement in Bitcoin’s price, the cryptocurrency’s Bollinger Bands have tightened, resulting in a potential volatility surge that will lead prices higher over the short-term with a break above the $62,500 price.

The last similar move was in February ahead of a surge that took Bitcoin from $45,000 to $55,000 in less than three weeks.

Coinbase

Despite the bullish move in Bitcoin – which is normally highly correlated with Coinbase (COIN) moves – shares of Coinbase dropped almost 10% during Thursday’s trading session.

The move came as Barron’s reported that CME Group (CME) will soon compete with Coinbase in the spot Bitcoin market.

While most investors may associate Coinbase with retail investor trading, the fact is that almost 40% of the company’s business is held by institutional investors, including hedge funds.  The CME’s association with institutional business would likely threaten institutional business as the exchange already offers trading in the Bitcoin futures market.

Coinbase’s technical picture recently turned bearish just days ago as the stock’s 50-day moving average initiated a declining trend.  Historically a declining 50-day moving average correlated with a 67% chance that a stock will see a lower close each day.

A look at the stock’s longer-term technicals targets the potential for another 20-25% decline before support from its 200-day moving average would kick in at $145.

COIN Price

About the Author

Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.

Read full bio