How To Trade, Process, Simple Trading

How To Trade WTW

In October 2015 Oprah Winfrey decided to wade into the financial markets… publicly.  I have no doubt she has long had an investment portfolio, but this is the first time in recent memory that she has so publicly disclosed a position.

Now, in truth, I have no idea how she came to have her position in Weight Watchers… Maybe she was approached by the company to endorse their product and her stake was part of her compensation (likely).

Or maybe she approached the company with the proposition.

In any case it really doesn’t matter how it came about.

However it developed…

She’s done well.

The question at this point is what now?  If you’ve ever found yourself sitting on substantial gains in a stock, you know it can be agonizing to try to figure out when and where to sell.

Is the stock just getting started on a much bigger move higher or is it tracing out a sell set up?

Should Oprah use Wall Street price targets and make her way to the exit? 

Should she use a trailing stop to stay in her position as long as possible.

Maybe she should use “the force?”

The truth is it really doesn’t matter which of these methods she chooses… Or if she chooses another method all together. 

Well maybe not “the force…”

At any rate, as long as she chooses a well-considered and tested sell discipline and applies it consistently, her results will speak for themselves.

How To Trade WTW

What would I do you ask?

Well as you likely know, I don’t trade single stocks anymore… However, based on the price action (which is what guides all of my trades as well as my recommendations to subscribers) I would sell the stock right here.  In truth, I would likely have sold it before now as it approached the resistance levels shown (previous congestion and TAOST Magnet Zone). 

Here is a look at the monthly chart of WTW.

how to trade wtw

As you can see, the monthly chart is tracing out a great sell signal against the TAOST Magnet Zone. 

Here’s a look at the weekly…

how to trade wtw

The weekly also reflects a good looking short structure… even though price looks to be making a push toward the top of TAOST Magnet Zone.

After having sold WTW, if the stock can get above the resistance zones and stabilize, I would be inclined to look for a place to buy the stock again using that previous resistance zones underneath as support zones now.  

How To Trade WTW Right Now

So what if you’re just looking at WTW right now for the first time (i.e. with no position)? 

What’s the right trade if you’re coming to WTW clean? 

Pretty simple actually…

I would look for a short entry right here and use an upside breach of the resistance zones to stop myself out of the trade. 

Why is that the right trade?  Because it gives me the asymmetrical outcome I look for on all trades.  Translation, the potential reward far exceeds the potential risk.

To be sure, Oprah Winfrey hasn’t reached out to me for my guidance on trading Weight Watchers. 

But that’s what I would tell her if she had.

Hope it helps.

KIS,

The Trader

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