The last two times Walmart shares did this the stock saw a huge rally

A first-quarter beat was not enough for Walmart's stock to bounce. One trader sees positive signs in its technicals that could bring about a rebound instead.

"Walmart is at a critical spot," said Frank Cappelleri, senior equity trader at Instinet, on CNBC's "Trading Nation" on Wednesday.

Shares of the world's largest retailer have seen a four-month rate of change of nearly negative 20 percent, he points out. That kind of decline is one so rare it's only happened twice in the past 10 years – once in 2009 and again in 2015.

"The positive is that this led to bounces every time," said Cappelleri.

Even as it has seen a sharp decline, its technicals still suggest some strength, Cappelleri added.

"Walmart is now getting close to a very impressive support line -- $80, $82, it's been able to bounce there over the last week or so and, coincidentally, we're also near an uptrending support line – again near that 2015 low," he said. "We like to have two areas of support together when we can as opposed to one. So, I think all those factors together could help Walmart bounce."

Walmart's stock has not broken below $80 a share since October of last year. It did hit a year-to-date low of $81.95 a share last Friday, but has since recovered to trade in Thursday's session at just under $85.

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Walmart's stock depends on investors keeping the faith in its long-term strategy, said Boris Schlossberg, managing director of FX strategy at BK Asset Management. Its recent deal to buy Indian company Flipkart, a multibillion-dollar bet, will likely put pressure on earnings for the next few years.

"The bulls are arguing that this is a huge bet on the future (essentially kind of like when Google bought YouTube for way too much money) ... and clearly Walmart is trying to make this whole strategy of clicks and bricks" work, Schlossberg told "Trading Nation" on Wednesday.

Any short-term strength will need to come from growth at its physical locations to make up for its investments in e-commerce, warns Schlossberg.

"If they can't grow in their bricks-and-mortar business while waiting for e-commerce to take off, the market will lose patience ," Schlossberg told CNBC in an email Thursday.

Walmart posted a 2.1 percent increase in same-store sales for its first quarter, while online sales in the U.S. rose 33 percent.

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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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