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Wal-Mart forms bullish RSI divergence versus NASDAQ 100

September 22, 2014

Last week, I showed how the NASDAQ 100 Index was in position to underperform other indices, which had bullish RSI divergence against the NASDAQ. I can then scan for long side candidates for this pair which match my RSI divergence criteria. Wal-Mart (WMT) meets these criteria exactly.

Wal-Mart (WMT) v NASDAQ 100 Trust (QQQ)
WMT V QQQ WEEKLY

  • The pair has been in a downtrend since April 2013 and has lost 33.2%
  • There is bullish divergence against the February low on the 14 week RSI and the MACD
  • There was bullish divergence within this low, against the 15 August low

Daily chart
WMT V QQQ DAILY

  • The low of 29 August (dashed line) was a bullish RSI divergence above 30 after divergences below 30 had been formed. This matches the RSI divergence criteria
  • A similar divergence had formed at the late April high
  • A break above the 05 September high of 0.77595 (red line) will complete the short term trend change
  • A daily close above 0.77595 will be used as an entry signal. The stop loss will be a close below the 29 August low (2.5% lower)

Summary

  • Buy the pair WMT versus QQQ on a daily close above 0.77595, with a stop loss as an end of day close below the low of 0.75666
  • Earnings for WMT are not until mid November, I try to avoid trading stocks with upcoming earnings and there is plenty of time before this

 

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