Mid-Week Update: It’s Time to Take Another Swift Gain in Walmart
Dear Trader,
The stock market is providing opportunities for us here at Burst Alerts Pro, but only in the right stocks following our disciplined approach.
This starts with the right stocks on the Watchlist. Then, if the stocks find the right entry levels, they become trades. And then we monitor them and look for them to hit our target prices, or if conditions warrant, we exit early with gains or controlled losses.
Now, this year is young, but it has been full of market action… and not all for the better.
Stocks have moved into the red so far with the S&P 500 Index down by around 4% and the even more technology-weighted Nasdaq 100 Index down by around 7%.
Right now, the big factor driving trades is the potential impact of higher US interest rates and bond yields.
Higher interest rates and bond yields could have an impact on funding costs for many companies, but with last year seeing plenty of new loans and bond issuances, more and more companies won’t be pressed to borrow a great deal as they should be good with plenty of cash on their balance sheets.
But higher rates and yields can impact discounting of future earnings and asset values to net present values (NPVs).
This means that if a highly valued stock, particularly in technology, is subjected to a higher discount rate, that could mean that the NPV of future earnings and future asset values could be lower, resulting in some traders selling those stocks to reflect this current valuation.
The antidote to this is to get companies’ future earnings and asset values up to counter that discounting. And so far, there is plenty to argue that there is the potential to do just that.
Earnings Ahead
Right now, we’re in earnings season. And results should be generally good.
But the key for the markets is guidance for the current and following quarters for this year. And analyst compiled estimates show projected gains for sales and earnings for these quarters.
This is good for getting companies’ future earnings and asset values higher and justifying buying shares now rather than selling.
And with US economic data supporting growth from consumers as well as businesses, the economy is not heading to recession right now but rather is still expanding, aiding more sales and earnings for companies.
This means that the stock market still presents buying opportunities… in the right stocks of the right companies. And that’s what we are focused on right now for our Burst Alerts Pro Watchlist.
For the latest market analysis, be sure to check out today’s session recording on our website.
Now, on to the stocks on the Watchlist this week…
Walmart Inc.
We’ll start off with Walmart Inc. (WMT), which we just took an early exit on per the Weekly Burst Alerts page on our site.
WMT has been a repeat winning stock for us with booked gains from hits before for this stock.
And today, it has again provided for another round of gains from this impressive discount retailer and its stock.
We are exiting the stock early as our monitoring of its trading led us to confirm that it was moving into the sell zone on a one-hour trading basis.
Per the Trade Tracker, this latest trade in WMT amounted to a gain of 3.66%, which is nice given the recent general stock market challenges.
And like we’ve done before, we may still get ready for another round of trading in the stock, so stay tuned.
If you haven’t done so already, close the WMT long trade idea.
Camping World Holdings Inc.
Camping World Holdings Inc. (CWH) is the Lincolnshire, Illinois-based RV retailer, service provider and financier.
RVs have found a massive resurgence in demand with the ongoing virus mess driving more awareness of the safety and attractiveness of using RVs for travel, tourism and leisure.
Camping World continues to be a go-to company for both new and used RVs as well as related merchandise and services. And it also provides financing for purchases of these vehicles.
In addition, it also supports various subscription clubs for RVs owners and even provides insurance and other additional services.
Sales have been on a nice upturn quarter after quarter from later 2020 through to the current reports.
Operating margins are healthy for the overall combination of the company’s operations and in turn, the company delivers an impressive return on its shareholders’ equity.
Adding to the allure of this stock is that it trades at a big discount of 80% of the trailing sales on a price to sales ratio basis (PS), making it a bargain buy.
The CWH daily time frame is in a sideways range. The market is at a low price hitting the up trend line.
The one hour time frame is below the short-term down trend line.
It will be a good idea to wait for the one hour time frame to break and close above the short-term down trend line before looking for long ideas.
Per the Watchlist, we have a target price for CWH at $39.36.
iShares Russell 2000 ETF
The iShares Russell 2000 ETF (IWM) is the ETF that tracks the Russell 2000 Index of US listed small-cap companies and their stocks.
We have been bullish on the small-fry stocks in the US market for a while, and the market conditions recently set the trade up again for this ETF.
The IWM daily time frame is in an up channel. The market is near the bottom of the channel showing signs of pushing bullish towards the top of the channel.
The one hour time frame is below the short-term down trend line.
It will be a good idea to wait for the one hour time frame to break and close above the short-term down trend line before looking for long ideas.
Per the Watchlist, we have a target price for IWM at $239.86.
Centene Corporation
Centene Corporation (CNC) is the Saint Louis, Missouri-based healthcare services and insurance provider.
It continues to be the leader in government healthcare services and is a major provider of Medicare, Medicaid and government subsidized private insurance.
The CNC daily time frame is in an up trend. The market is at a low price hitting the up trend line.
The one hour time frame broke the short-term down trend line and entered into the buy zone.
Per the Watchlist, we have a target price for CNC at $83.16.
Silvergate Capital Corporation
Silvergate Capital Corporation (SI) is the La Jolla, California-based bank holding company.
It operates as a traditional banking company but has its real focus on providing services to the numerous technology companies in California and beyond.
With technology companies thriving, its services are in demand, aiding revenue.
And with shorter-term US interest rates set to rise to more normal levels, it should aid the banking company in improving interest margins between its liabilities (including deposits) and its assets (loans).
The SI daily time frame is in an up trend. The market is at a low price hitting the up trend line.
The one hour time frame is below the short-term down trend line.
It will be a good idea to wait for the one hour time frame to break and close above the short-term down trend line before looking for long ideas.
Per the Watchlist, we have a target price for SI at $184.56.
Get The Full Rundown
To get the latest updates on these stocks and the markets that you need to know about, be sure to check out today’s session recording on our website.
And to get the full rundown on all of our stocks, click here.
Keep on trading,
Josh Martinez
Editor, Burst Alerts Pro