WisdomTree Investments, Inc. (NASDAQ: WETF)

WisdomTree Investments, Inc., through its subsidiaries, operates as an exchange-traded funds (ETFs) sponsor and asset manager. It offers ETFs in equities, currency, fixed income, and alternatives asset classes. The company also licenses its indexes to third parties for proprietary products, as well as offers a platform to promote the use of WisdomTree ETFs in 401(k) plans. It develops index using its fundamentally weighted index methodology. In addition, the company provides investment advisory services.

Take a look at the 1-year chart of WisdomTree (NASDAQ: WETF) with the added notations:

1-year chart of WisdomTree (Nasdaq: WETF)

After the May to December-January drop, WETF started bouncing on top of a clear $10 support (green) over the following 5 months. Now that the stock appears to be falling back down to that support level again, traders should be able to expect some sort of bounce. However, if the $10 support breaks, lower prices should follow.

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The Tale of the Tape: WETF has a key level of support at $10. A trader could enter a long position at $10 with a stop placed under the level. If the stock were to break below the support a short position could be entered instead.

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

Follow me on Twitter: @cmtstockcoach