Is the wait over for Weight Watchers (WTW)? Here’s your answer. (October 24, 2017)


One of our members was asking in the forum today about whether this was a good time to be buying Weight Watchers ( NYSE:WTW ). This is a stock that we have been on for a while; we first really looked at it back in April. It has been a real high-dollar mover since that time. You can see how the stock has been traded. It hits this level up here, $50.00, just about right on the nose. Since that time it has been consolidating.

This has been traveling sideways for over two months. It has held right at the 50-day moving average, we like to see that. There is more to it than that, we could take the 50-moving average away and you still would just see a nice level of support along here. The stock has been trading in a sideways range, pretty calm back here, a little bit more perky right back here but still in a trading range.

What I like about this right here is, I look here, I have got a pretty fast moving average here for volume, which I like to look at if I am really kind of getting in the weeds if I am looking at a stock in a really tight range. What I like here is, during this part of the sideways consolidation, the stock was trading on lower volume and then as it came down here it was even lower volume still. And we start to see a couple green bars here that are poking their heads up above this 5-period moving average, where before we saw the red bars, the stock still under distribution. We get some price action to the upside, back above the 50, and then we see another one, kind of a continuation day.

You could have actually bought on this day. I didn’t buy it, but frankly, if I had really seen it I would have and I would still be in the trade. The idea is that you see the stock trading sideways, the fundamentals look good, the growth story is good because waistlines are shrinking, at least if you follow the program, and then the stock breaks out and look at the volume, heavy volume. So you want to stay long this stock. Boom! Buy it here, resistance at 50.00, let’s go bulls, and then the stock is doing this.

Now, it hasn’t negated your trade, you are still in the trade you are just not getting paid off right away. There is no reason to get out, still no reason to get out. And that leads us to where we are now. The folks that are in back here are likely still in. They are not losing money, they are not making any, but they are not losing money. So this is really a very docile market here. For about three weeks the stock has traded sideways. We like it when the market is a little docile in a stock that is just trending sideways. And so now you see these green bars starting to poke their heads out a little bit higher.

My suggestion is, yes, this is a good time to buy; still. Keep the stop, that is a little bit too low down there, 12 percent, so you can’t do that. You have to rely on this level of support, let’s say $44.00. You have got to rely on this level of support at $44.00 as THE level. So you keep a stop, it would have to be literally around 8 percent or so. Do that; you are long this stock and then we have still got at least couple weeks into earnings on November 6th. You stay long and hopefully, I know hope isn’t a method but it is something that we use sometimes. Hopefully, the stock will start moving up in anticipation of strong earnings. Then do we hold over earnings? You know what? Ask me on the 5th because the stock can do a lot between now and then, and hopefully, it is going to be moving up.

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