Walmart’s recent market performance has been strong, following its rebound last year. Analysis of its current breakout utilising the Elliott Wave structure shows a clear path and upside targets driven by robust momentum.
The recent rally for Walmart began in the $86 – $77 Blue Box area, with buyers entering during a market dip in April 2025. The stock finished its wave IV pullback before reaching new all-time highs in wave V. Currently, there are three new high swings, indicating that the sequence is not yet complete.
Walmart is trading within the $111 – $120 target zone, signalling that caution is advised rather than pursuing the rally. Following wave ((III)), a larger pullback in wave ((IV)) is anticipated, providing the next buying opportunity before the trend continues upwards.
The bullish cycle for Walmart remains strong on a weekly basis, suggesting that buying opportunities should be targeted during pullbacks. Timing entries accurately is key, using the Elliott Wave strategy to establish positions after a 3, 7, or 11-swing correction. The proprietary Blue Box system can help identify high-probability entry zones, aiming for success in future trades.
As we look at the market in early January 2026, the analysis from last year has proven accurate, with Walmart having reached its $111 – $120 target zone in late 2025. The stock is now showing signs of entering the predicted wave ((IV)) pullback, creating new opportunities. Derivative traders should now pivot from chasing upward momentum to preparing for this corrective phase.
With the stock pulling back from its recent highs, traders should consider strategies that benefit from a temporary halt or decline in price. Selling out-of-the-money call credit spreads could be an effective way to generate income, based on the view that a new immediate high is unlikely. This aligns with the forecast that wave ((III)) has likely completed, and a period of consolidation or decline is beginning.
This technical outlook is reinforced by the latest economic data from the end of 2025. The December 2025 retail sales report showed a modest 0.2% increase, falling short of expectations and suggesting that consumer spending is beginning to cool after a strong year. This fundamental pressure supports the technical case for a near-term pullback in consumer-facing stocks like Walmart.
The anticipated pullback presents a strategic opportunity for entry, and selling cash-secured puts is a prudent way to engage with it. By selling puts at strike prices near potential support levels, perhaps around $100 to $105, traders can collect premium while waiting for the correction to find its floor. This tactic aligns with the strategy of buying the dip after a clear corrective pattern has formed.
Historically, we’ve seen similar pullbacks in Walmart offer solid entry points, such as the 15% correction we witnessed in the second quarter of 2025. A similar move from the recent peak would target the $102 level, making it a key area of interest. An increase in implied volatility during this dip would make such premium-selling strategies even more attractive.
