Analyzing Today’s Trade: WMS

I bought 400 shares of WMS at $39.05, based on my breakout-pullback trading setup. The stock broke on strong volume earlier this month, while pulling back on diminishing volume. Today’s confirmation candle at two tiered support (20 day moving average and price) provide the entry signal. Also note that OBV is in a strong uptrend and stochastics are oversold and turning up.

Take a look at the chart and note the difference between the current breakout (green arrow) and the December failed breakout (blue arrow). What is the key difference between the two breakouts?

Accumulation. You here me talk about it all the time, and this chart provides a great example of how important it is to monitor accumulation patterns. The December breakout was destined to fail, as up volume barely moved as price climbed. OBV during this period stayed within a mediocre range, further questioning the breakout.

Now look at the current breakout. Not only is price breaking out, but OBV is as well. Volume is motoring higher, and today’s confirmation move was on above average volume as well. This leads me to believe we will at least retest the recent high.

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