Maybe it’s just us, but it seems as though classic technical patterns are working less and less these days. We’ve seen several instances this year where patterns that are considered bullish are leading to breakdowns, while bearish chart patterns are reversing higher. A case in point is Wal-Mart’s (WMT) chart pattern late last year. From early 2013 through October 2014, WMT was stuck in a sideways range as the broader equity market rallied. Then in November 2014, WMT reported stronger than expected earnings sending the stock to new all-time highs on much stronger than expected volume. After months of doing nothing, things were finally looking up for Wal-Mart.
Following WMT’s break-out in November 2014, the stock did go on to post additional gains, but the honeymoon didn’t last long. The chart below is an extension of the chart above showing WMT’s performance up until now. After closing at $82.94 on 11/13, WMT went on to rally an additional 9% over the following two months. But from there it has been all downhill. Since its high on 1/8, WMT has lost a third of its value, turning a textbook breakout into an epic breakdown.