Walmart stock is down this week while short interest is rising, a combination that has historically pointed to post-earnings rebound. Both of S3’s predictive models suggest a bullish setup heading into tomorrow’s earnings.

• WMT reports tomorrow morning.

• The stock is down, and the short interest is up this week.

• The stock tends to revert so its downwards move is bullish.

• The shorts tend to be wrong so an increase in short interest is also bullish.

• These two models reinforce and make a positive more likely.

• WMT and other retailers are warning the government about the consequences of tariffs.

• The stock tends to move 4% on earnings and is priced to move 5%.

The graph shows that the short interest and stock price has diverged, they usually move together.

WMT is up for the year and is outperforming the S&P. and is up 7%.

With WMT outperforming the S&P year-to-date and short interest diverging from recent price action, the data points to potentially favorable reaction post-earnings. A positive surprise could squeeze short sellers and confirm the bullish signal from both predictive models.

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