Multiple consumer-related reports to impact Wal-Mart

Whats happening with WMT: Mega-retailer Wal-Mart (WMT) has enjoyed strong stock gains during the latter part of 2014, and as a result the stock has appreciated 9.7% on the year. Multiple retailer-related reports are scheduled for release this week, which will help determine whether or not WMT is able to build on its recent momentum as we head into the new year.

Technical analysis: WMT was recently trading at $84.23, down $2.84 from its 12-month high and $11.96 above its 12-month low. Technical indicators for WMT are bullish with the stock showing signs of a possible trend reversal. The stock has support above $82.65 and recent resistance below $85.00. Of the 20 analysts who cover the stock, five rate it a strong buy, two rate it a buy, 11 rate it a hold, and two rate it a strong sell. The stock receives a Standard and Poors 3 STARS Hold ranking.

Analysts thoughts: Retail has been in focus over the last month, with the always-busy holiday shopping season upon us. Consumer confidence is back to its pre-recession levels, which has helped most big retailers trade higher in recent months. This week, the University of Michigan will release its finalized reading on December consumer sentiment. The preliminary report earlier this month was very bullish, and showed consumer sentiment rose to near an eight-year high. The revised number may be slightly lower, but it will still be a good reading. Improvements in the job market, and lower gasoline prices are likely to keep consumers in an upbeat mood. Bloomberg will also update its weekly reading on consumer comfort, which has also been on the rise. I expect another solid reading here as well. Look for oil prices to keep consumers happy, and retailers to continue building on their recent momentum.

Stock-only trade. If youre looking to establish a long stock position in WMT, consider buying the stock under $84.50. Sell if it falls below $76.25 or take profits if it gets to $97.00.

Option trade. If you are looking for a hedged options trade on WMT, consider a March 75/77.50 bull-put credit spread for a 25-cent credit. Thats a potential 11.1% return (44.1% annualized*) and the stock would have to fall 7.7% to cause a problem.

Speculative call-only trade. For those with an appetite for higher risk and bigger returns, consider buying the February $80 call. If WMT rises just 3.7%, you can pull in a 20%, or better, profit on the option. However, if the stock moves lower, this kind of trade could lose a significant amount.