Advanced Drainage Systems Inc. (WMS) Breaks Through

Advanced Drainage Systems, Inc. (WMS) engages in the manufacture of thermoplastic corrugated pipe which provides a suite of water management products and drainage solutions for use in the construction and infrastructure marketplace. It operates through the Domestic and International segments…

Take a look at the 1-year chart of WSM below with added notations:

WSM had been hitting resistance at $72 (green) repeatedly over the most recent few months, but now that the stock has broken above that resistance, while also hitting a new 52-week high, overall higher prices should be coming. If WSM pulls back, the $72 level should become key support.

The possible long position on the stock would be on a pullback down to that level with a stop placed under it. A failure to hold $72 could negate the expectations for a higher move.

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