Talking Numbers

Wal-Mart is badly trailing the market

Wal-Mart is badly trailing the market

Wal-Mart's C-suite shakeup sent shares of the world's biggest retailer down around 1 percentThursday.

The company announced its U.S. CEO Bill Simon would be stepping down from his role in just two and a half weeks after spending four years with the company. Greg Foran, president and CEO of Wal-Mart China since March 2012, will take over the reins of Walmart U.S. from Simon on Aug. 9.

The reason for Simon's departure is unclear, but it's no secret the company has been struggling. Wal-Mart's U.S. store sales have fallen for the past five quarters, and shares of the big-box retailer are down more than 2 percent in the past 12 months.

(Read: How Wal-Mart's new US head can right the business)

So, what effect, if any, could a new CEO have on Wal-Mart's stock?

"We don't like [Wal-Mart] at all. We would consider it a bad house in a bad neighborhood at this point in the cycle," said Oppenheimer's head of institutional portfolio strategy Andrew Burkly, who warned that the entire retail space should be kept at arm's length.

"The switch in strategy here would basically suggest the head of back to school and the year-end holiday season aren't going to particularly improve.  We don't see it picking up on the earnings revision side, so we would be sellers."

(Watch: Wal-Mart US CEO out... what's next?)

According to Auerbach Grayson's global technical analyst Richard Ross, Wal-Mart's charts have gone from bad to worse.

"For the last year this stock's been a real disappointment. [Wal-Mart] is trailing the S&P 500 by 20 percent over the past 12 months, and 10 percent on a year-to-date basis. That's not good in a bull market."

On a year-to-date chart, Ross pointed out that the stock is barely clinging to its 50-day moving average and fighting against resistance at $77 per share. 

However, in Ross' opinion, the concern big is in Wal-Mart's longer-term weekly chart. "You see that 100-week moving average that has provided support.  We've held that level since 2011, that's almost three years.  That comes in at around $75 [ per share] – that's a big round number.  Any break below $75 [per share] and Wal-Mart is going much, much lower," he warned. "That's exactly where this stock wants to go."



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