What’s Wrong with Walmart?

The short answer is profit-taking. Shares of Walmart (NYSE: WMT) were up more than 4% for the year through Friday’s close before traders and investors decided to start taking chips off the table. In the days since, WMT has lost over 6% during a three-day decline that has taken the stock into technically oversold territory for the first time since mid-November.

In fact, last Friday’s new highs marked the highest print in the stock in over a year. The 4% return in the first month and half may seem underwhelming compared to many of the higher beta stocks in the market (or even, truth told, compared to the market itself which was up well over 6% through last Friday’s finish). But with overbought conditions late in the stock’s 2012 rally leading into a sideways consolidation with more selling than buying, it was little surprise that those traders and investors that did not lock in gains during the trading range were all too eager to do so once the stock began to break down.

Is there opportunity in the current selling in Walmart? Down three in a row and technically oversold, shares of Walmart have earned 7 out of 10 ratings, neutral levels to be sure, but relatively high ratings for the low volatility WMT, which hasn’t had a rating this high since the middle of November. The stock also has a positive, short-term edge of just under three-quarters of a percent.

While Walmart continues to wait for buyers, the market for Target (NYSE: TGT) appears to have buyers lining up around the block to buy shares. Target Corporation has closed higher for four out of the last five trading days after finishing higher by well over two and a half percent on Thursday. Strength in the stock has put shares of Target into short-term overbought territory, and although TGT continues to earn neutral ratings of 5 out of 10, traders and active investors should be wary of any near-term upside in the stock.

Note that for all the selling in a major retailer like Walmart, strength in retail overall continues to be the name of the game. The S&P Retail SPDRS ETF (NYSE: XRT) closed in short-term overbought territory above the 200-day on Thursday, just shy of a new, 52-week high.

That said, shares of Amazon.com (NASDAQ: AMZN) continue to languish in bear market territory, having closed lower for three days in a row and six out of the last seven.

Be sure to read our latest from 7 Stocks You Need to Know: “Buying the Selling in Weight Watchers”.

David Penn is Editor in Chief of TradingMarkets.com