Mad Money

Cramer's charts say Costco and Target are ready for pullbacks, but Walmart's a buy

Key Points
  • Technicians Tim Collins and Larry Williams help CNBC's Jim Cramer examine the charts of big-box retailers boosting their e-commerce wares to compete with Amazon.
  • Shares of Costco and Target seem to be peaking, but Walmart's stock might be ready to roar, the "Mad Money" host says.
Charts say Costco, Target ready for pullbacks, Walmart a buy
Charts say Costco, Target ready for pullbacks, Walmart a buy

Much of the stock market seems to agree that in the e-commerce industry, there can only be one winner, and that that winner will undoubtedly be Amazon.

But for CNBC's , the truth "is a little more complicated," he said Tuesday. "In reality, online shopping is still a rapidly growing category with room for more than one player."

Big-box chains like Walmart and Target have realized that, the "Mad Money" host said. Both companies have upped their spending on e-commerce and leveraged their brick-and-mortar locations in the process, leading to the rise of "buy online, pick up in store," fondly known in the industry as BOPUS.

So, to see whether these "old-school retailers" can really start taking digital market share, Cramer enlisted the help of technician Tim Collins, his colleague at


Collins began by inspecting the daily stock chart of Walmart, a long-standing Arkansas-based chain and the parent company of budding Amazon competitor

In the last five months, shares of Walmart have made a rounding bottom pattern, hitting two low points — known as a double bottom among technicians — in the week of May 7 and the week of May 29. Six weeks ago, shares headed higher, with Walmart's stock settling at $89.77 a share as of Tuesday's close.

To Collins, the trend looked like a "pattern within a pattern," Cramer said. Walmart's stock was already trading higher in a tight range, but since the start of July, it has rallied within an even tighter range. That created two floors of support — at $87 and $88 — in addition to the third floor of $82, where the stock bottomed in May.

"According to Collins, this is a great way to define your risk," Cramer said. "If the stock goes below $87, roughly $3 bucks down from where it is, he'd become more cautious; if it breaks down below $82, he'd tell you to abandon the bull thesis and simply cut your losses."

But based on Walmart's latest rally and the Chande Trend Meter, a key indicator that distills a bunch of metrics into a single score, Collins said shares of Walmart are poised to rally.

In fact, if the stock surges past the $90.50 level, "he's betting it'll be smooth sailing all the way up to $103 bucks as it fills in the gap from the big late-February decline," Cramer said.


Next, Collins looked at the weekly chart of Target's stock. Having just made a fresh 52-week high on Tuesday and inching toward its all-time high, the stock seemed to Collins like it was close to being overextended.

Target's full stochastic oscillator, which technicians use to tell whether a stock is overbought or oversold, is in "extremely overbought territory," meaning it could be due for a pullback after a rapid run higher, Cramer said.

"Collins says the stock could get a bit of boost if it breaks out above the ceiling of resistance at $82.50, ... but he doesn't like the risk-reward at the moment," the "Mad Money" host said. "That's why Collins recommends swapping out of Target and swapping into Walmart, which has a lot more room to play catch-up."


Cramer also called on's Larry Williams, a renowned technician and the namesake for a number of key indicators, to take a victory lap for his October 2016 call on the stock of Costco.

Back then, Cramer and Williams recommended buying the roughly $150 stock of Costco, which has rallied to $223 and change in less than two years.

"I bring this up ... because [Williams] says it's time to declare victory in Costco and ring the register," Cramer said on Tuesday, pointing to a weekly chart of Costco's Williams COT indicator, a tool technicians use to see how big institutions are trading a given stock.

After Costco's recent rally, the Williams COT has plunged, a sign that major financial players are selling the stock, which was one reason Williams said the stock could be ready for a longer term sell-off.

"My view? Look, I love Costco's membership-based model, I go there all the time, but nobody ever got hurt taking a profit," Cramer said.

"The bottom line? The charts, as interpreted by Tim Collins and Larry Williams, suggest that you might want to sell some Costco and Target here — they've run a lot and they both might be due for a pullback," he concluded. "But Walmart, on the other hand, is looking mighty attractive and could be the next retailer to explode higher."

WATCH: Cramer's charts show Walmart stock ready to rebound

Cramer's charts say Costco and Target are ready for pullbacks, but Walmart's a buy
Cramer's charts say Costco and Target are ready for pullbacks, but Walmart's a buy

Disclosure: Cramer's charitable trust owns shares of Amazon.

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