Weight Watchers International, Inc. (NYSE: WTW)

Weight Watchers International, Inc. provides weight management services worldwide. The company operates in four segments: North America, United Kingdom, Continental Europe, and Other. It offers a range of products and services comprising nutritional, exercise, behavioral, and lifestyle tools and approaches. The company also engages in the meetings business, which presents weight management programs, as well as allows members to support each other by sharing their experiences with other people experiencing similar weight management challenges.

Take a look at the 1-year chart of Weight Watchers (NYSE: WTW) with the added notations:

1-year chart of Weight Watchers

After skyrocketing in October and November, then the December-January drop, WTW ended up bouncing on top of the $10 support (green) a couple of times over the following 8 months. Now that the stock appears to be falling back down to that support area 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:: WTW has a key area 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