Wal-Mart Stores, Inc. (WMT) shares jumped nearly 6% on Tuesday after the company held its annual meeting with the investment community. While a $20 billion share buyback grabbed headlines, the company's plans to add 1,000 online grocery locations in the United States next year – compared with fewer than 15 supercenters – is perhaps the most important. The move represents a clear strategic shift from brick-and-mortar retail to online shopping.

The move comes shortly after Wal-Mart's largest online rival, Amazon.com, Inc. (AMZN), acquired Whole Foods Market, Inc., presumably in a bid to bring grocery shopping online in the future. This is significant because mass-market retailers like Wal-Mart and Target Corporation (TGT) rely on groceries to bring consumers into stores to purchase other items. Groceries constitute one of the few categories that have required physical presence at a store to purchase. (See also: How Wal-Mart Is Beating Amazon at Its Own Game.)

Technical chart showing the performance of Wal-Mart Stores, Inc. (WMT)

From a technical standpoint, the stock broke out from trendline and R1 resistance at $80.26 a few days ago before extending its breakout past R2 resistance at $82.39 and another trendline at around $84.00. The move to fresh 52-week highs sent the relative strength index (RSI) to overbought levels at 74.84, but the moving average convergence divergence (MACD) experienced a bullish crossover, and the overall trend remains strongly bullish.

Traders should watch for a near-term pullback or consolidation above trendline support at $84.00 over the coming sessions given the lofty RSI reading. A breakdown from these support levels could lead to R2 support at $82.39 or R1 support at $80.26, while a breakout higher could lead to the $90.00 level, where many analysts have placed their price targets. Traders should maintain a cautiously bullish outlook on the stock at current levels. (For more, see: Wal-Mart Stock Could Outperform Amazon in 2018.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

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