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<\/p>\nAmerica\u2019s biggest retailer got hit with a sledgehammer yesterday.<\/p>\n
Walmart Inc. (WMT) tanked after the company reported earnings that didn\u2019t measure up to Wall Street\u2019s expectations. The stock fell 10% \u2013 its biggest one-day decline in almost seven years. And it prompted a lot of bargain-hunting talking heads to say something like, \u201cNow is a good time to buy WMT.\u201d<\/p>\n
I disagree\u2026 at least for the short term.<\/p>\n
At yesterday\u2019s closing price of $94.11 per share, WMT still trades at 25 times earnings and offers a dividend yield of 2.17%. That\u2019s still relatively expensive compared to Walmart\u2019s historic price-to-earnings (P\/E) ratio \u2013 about 22 \u2013 and dividend yield of 2.6%. So it\u2019s not exactly a bargain price.<\/p>\n
I get it though. I understand the attraction to being able to buy one of America\u2019s iconic stocks at a 10% discount to where it was trading just one day ago. But, here\u2019s the thing\u2026<\/p>\n
Stocks that get hit over the head by a sledgehammer might stumble back to their feet and take a step or two in a higher direction\u2026 but they\u2019ll almost always fall over again and make a lower low. That\u2019s often when investors get a better buying opportunity.<\/p>\n
Here\u2019s an example of what I mean. Take a look at this chart of Target (TGT) over the past year\u2026<\/p>\n
<\/p>\n
TGT got hit with three sledgehammers last year. Each one was a poor reaction to an earnings report. And each one led to a good buying opportunity in the stock \u2013 but not right away.<\/p>\n
Following each sharp selloff in TGT shares, the stock gained its footing and stumbled a bit higher. But each time, the stock came back down and hit a lower low before mounting a more significant rally.<\/p>\n
My Delta Report<\/em> subscribers traded TGT based on this sledgehammer pattern all three times last year. We recorded gains of 8.2% in nine days, 12.1% in 29 days, and 136% in four days.<\/p>\n I expect we\u2019ll have a similar opportunity to earn big gains in WMT as a similar pattern plays out in the stock. But we\u2019re not buying it yet.<\/p>\n Any short-term bounce in WMT from here is likely to be followed by another decline to a lower low. That\u2019s when we\u2019ll be looking to buy WMT.<\/p>\n Best regards and good trading,<\/p>\n Jeff Clark<\/p>\n P.S. <\/strong>The \u201csledgehammer pattern\u201d I showed you today is just one of many methods we use in the Delta Report<\/em> to lock in low-risk, fast, outsized gains each week.<\/p>\n We don\u2019t follow the talking-head playbook\u2026 We look at the markets rationally and find the most profitable trade for each week\u2019s conditions.<\/p>\n To learn more about a Delta Report<\/em> subscription, click here<\/a>\u2026<\/p>\n![](\"https:\/\/casey-assets.s3.amazonaws.com\/images\/misc\/jeff-clark-signature.png\")
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