Walmart has likelly bottomed

Happy New Year!!

The year 2015 has finally become a history. It is certainly a very disappointed year for investors in general: it started with a great prospect with quite bullish trend continuing for the first half of the year but the trend suddenly turned in Aug when a 10% crash turned a lot of people upside down. Since then, the market has totally lost direction with insane volatility. Sadly, S&P closed 2015 with a loss. If you follow my blog, you may have noticed that since April I have become quite bearish for the market, calling for a trend change. Yes, I was a bit early but eventually the market has turned to a downtrend. Since September, I have pinpointed a few market short-term turning points. My friend, Frank Yang, has summarized these calls in a WeChat group as follows:


今年美股市场比较大的波动中，老林 的博客文章提示了几个 contrarian 风格的相当漂亮的波段：
http://redbullmoneytalk.blogspot.com/2015/09/im-very-bullish.html  9/30    9月底，美股二次探底，跌破1900，市场一片恐慌。老林强力看好超跌反弹

http://redbullmoneytalk.blogspot.com/2015_11_01_archive.html 11/14
11月初，美股 SPX 反弹至2100之上，老林强力建议做空，随后大盘跌至 2020 左右。巴黎恐袭，市场恐慌，老林认为超跌反弹随时来临，但11月底，12月初将有新一波下跌，并跌破 2000 （Dec 14th, SPX 最低1993）

http://redbullmoneytalk.blogspot.com/2015_12_01_archive.html 12/11
美股12月上旬快速如期下跌后，老林预测 FED 加息是必然的，但 FED 对美国资本市场相当关爱，那么宣布加息的那周，很有可能开始 Santa Claus Rally

http://redbullmoneytalk.blogspot.com/2015_12_01_archive.html 12/23
美股如预期般的3天快速大幅反弹后，老林提示了 Junk Bond（HYG）预示的2016年美股大幅波动及调整的风险，VIX 及美股 breadth 的背离(大部分股票的参与程度严重不够，表现较差），认为美股大盘 SPX 快速反弹至 2065 已基本到顶。2016年某时点，美股有跌至 1800 的可能


So what do I think about the market in 2016? Well, unless the market can decisively turned around (meaning S&P will break out above 2130), my general view is still quite bearish at the moment and am even thinking S&P may substantially go down towards 1800 at some point. One thing I'm quite confident to say is that the market volatility will still be insanely high and some big swings will continue as what we saw in the last few months in 2015. This may be good news for traders but for long-term investors, this is not an easy time to invest. You got to be very selective in choosing what stocks to buy for long-term. One stock I think has a great value at the moment and is likely presenting a good entry point now is Walmart (WMT). In Oct 2015, I wrote about WMT after it got crashed: WMT is very cheap valuation-wise. After such a historical bloodshed, I don't think WMT will go down much further from here. The extreme dismal sentiment towards its long-term prospects has likely been priced in its price. Short-term it may still fluctuate a lot due to the overall market uncertainty; longer term however, I'd feel more comfortable to establish a position at this level, if you are willing to stay with it with DRIP in place. After a few months of sideway fluctuations between $58-60, WMT has likely bottomed at this level and is showing a sign of a bullish uptrend. A few technical indicators have made me feel bullish for WMT now:

• In the past month, WMT has clearly outperformed the general market: 4% increase for WMT (pink) vs 2.7% decline for S&P (green). This is typically a bottoming sign for a value stock when they refuse to go down further when the general market is weak.
• Its 9 DMA (red line) has crossed above its 50 DMA (blue), which is another bullish sign, suggesting a turning point to the upside may be starting.
• Its momentum indicator, MACD is also positive in supporting the early uptrend

Of course, its prices may still fluctuate, especially it is likely WMT may come down towards $60 in the next few sessions but I doubt it will go down much further from there. Using any weakness as your entry point for long term may be a great idea in a volatile market! In the next few months, WMT may challenge its next resistance around $66 and then around $70. Personally I really like what I'm seeing of WMT!!