Wyndham Worldwide Corporation provides hospitality services and products to individual consumers and business customers worldwide. It operates three in segments: Lodging, Vacation Exchange, and Rentals, and Vacation Ownership. The Lodging segment franchises hotels in the upscale, upper midscale, midscale, economy, and extended stay segments, as well as provides property management services for full-service and select limited-service hotels. The Vacation Exchange and Rentals segment provides vacation exchange services and products to owners of intervals of vacation ownership interests (VOIs); and markets vacation rental properties on behalf of independent owners. The Vacation Ownership segment develops, markets, and sells VOIs to individual consumers; and provides consumer financing in connection with the sale of VOIs, as well as offers property management services at resorts.
Take a look at the 1-year chart of Wyndham (NYSE: WYM) below with added notations:
WYN has been declining ever since it’s beginning of March peak near $93. However, over the past two months the stock had fallen into a common pattern known as a rectangle. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern.
WYN’s rectangle pattern had formed a $80 resistance (green) and a $70 support (blue). At some point the stock had to break one of those two levels, and last yesterday WYN broke the $80 resistance.
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The Tale of the Tape: WYN broke out of its rectangle pattern. The ideal long opportunity would be on a pullback down to the $80 level with a stop placed below it. A break back below $80 could negate the forecast for a move higher.
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!
Christian Tharp, CMT
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