Walter Investment Management Corp (NYSE: WAC)

Walter Investment Management Corp., together with its subsidiaries, provides business services to the residential mortgage industry in the United States. It offers residential loan services that focuses on credit-sensitive residential mortgage assets; and owns a mortgage portfolio, as well as operates an insurance agency serving residential loan customers. The company was founded in 1958 and is headquartered in Tampa, Florida.

To review Walter’s stock, please take a look at the 1-year chart of WAC (Walter Investment Management Corp.) below with my added notations:

1-year chart of WAC (Walter Investment Management Corp.)

It is very obvious that WAC has formed a clear resistance at $50 (red), which would also be a 52-week high breakout if the stock could manage to break above it. In addition, the stock has been climbing a very nice trendline of support (green). These two levels combined have WAC sandwiched within a common chart pattern known as an ascending triangle. At some point, the stock will eventually have to break one of those two levels.

The Tale of the Tape: WAC has an up trending support and a 52-week resistance level to watch. A long trade could be made on a breakout above the $50 resistance or on a pullback to the support, which currently sits at $45. A break below the up trending support could be an opportunity to enter a short trade.

Before making any trading decision, decide which side of the trade you believe gives you the highest probability of success. Do you prefer the short side of the market, long side, or do you want to be in the market at all? If you haven’t thought about it, review the overall indices themselves. For example, take a look at the S&P 500. Is it trending higher or lower? Has it recently broken through a key resistance or support level? Making these decisions ahead of time will help you decide which side of the trade you believe gives you the best opportunities.

No matter what your strategy or when you decide to enter, always remember to use protective stops and you’ll be around for the next trade. Capital preservation is always key!

Good luck!

Christian Tharp, CMT