WMT, PLTR and BABA: Reaction to Earnings and Other News

Good Thursday Morning, MPTraders!  February 20, 2025-- Pre-Market Update: WMT Earnings Reaction (down)... PLTR nosedives in reaction to CEO Karp selling shares... BABA pops in reaction to Earnings... 

WMT (from Seeking Alpha):

• Retail giant Walmart (NYSE:WMT) saw its shares tumble 7% as its profit and sales outlook fell short of estimates, despite exceeding Q4 expectations. For 1QFY26, the company expects net sales growth of 3.0% to 4.0% (midpoint 3.5%), below the 3.86% consensus, while adjusted EPS is forecasted between $0.57 and $0.58 (midpoint $0.575), missing the $0.65 consensus. For FY2026, Walmart projects net sales growth of 3.0% to 4.0% (midpoint 3.5%), trailing the 4.19% consensus, with adjusted EPS guidance of $2.50 to $2.60 (midpoint $2.55), compared to the $2.77 consensus. The weaker-than-expected outlook highlights ongoing competitive pressures and potential margin constraints...

Technically, my setup work in WMT argues that the stock is in the grasp of a meaningful correction in the aftermath of the completion of the upleg from the August 2024 low at 65.00 to the Feb. 2025 high at 105.80. My optimal target window (see chart) is 89.50-91.50 from where my pattern work will be looking for signs of corrective exhaustion ahead of an upside reversal after a 15% correction. Only a closing breach of 88.70 will signal the likelihood of a much deeper correction... Last is 95.57... (continued below my chart)...

PLTR (Palantir Technologies) nosedived during yesterday's aftermarket session. According to Seeking Alpha, the weakness is more a negative reaction to a Pentagon budget cut rather than from CEO Alex Karp selling shares:

• Palantir Technologies (NASDAQ:PLTR) fell over 5% after a memo from Defense Secretary Pete Hegseth, obtained by the Washington Post, revealed plans for an 8% annual cut to the defense budget over the next five years. The proposed reductions, due by Feb. 24, raised concerns about potential impacts on defense contracts. However, 17 categories are reportedly exempt, including border security, nuclear weapons modernization, missile defense, and one-way attack drones...

Whatever the reasons for the sell-off, technically, PLTR has the right look of completing a major Jan-Feb upleg from 63.40 (1/13/25) to 125.41 (2/19/25), and as such, was looking for an excuse for a correction. The DOD and Alex Karp have provided one! 

My pattern work is acutely aware of the UNFILLED 2/03/25 post-Earnings Up-Gap from 83.74 to 99.32, which looms large as a downside "corrective magnet" in the hours and days ahead. At the moment, my optimal corrective target window is 89 to 94, which will amount to a 25%-30% decline from the ATH of 125.41. 

That said, I also doubt that the correction will be a straight line to the downside. PLTR may well carve out a corrective period of failed rally attempts into the 115-119 resistance zone followed by a series of lower corrective lows during a 1 to 3-week timeframe before PLTR exhibits conditions favoring the resumption of dominant bull trend strength... Last is 108.16...

Next up: BABA...