Wolverine could be a horror-flick due out this summer in movie theaters. It could be an animal that resembles a small bear (but is actually the largest member of the weasel family). Alumni of the University of Michigan have their own idea of what a Wolverine is.
But in my February 20th newsletter, I focused on the company called Wolverine World Wide Inc., a maker of footwear and apparel.
On February 19th, WWW jumped strongly in response to a good earnings report. Wolverine’s earnings report produced a 60% increase in revenue and earnings 54% higher than expected, and the stock gained 5% on volume 260% above the average level.
I mentioned that Wolverine had completed the acquisition of four brands, and the CEO's focus on building the brands' momentum.
I found a strong seasonal pattern for WWW, saying ” It has increased an average 9.2% over the next 9 weeks, with gains in a whopping 90% of the years. That’s 26 out of the last 29 years.”
I had backtest results showing that by itself the 9-week seasonal was a very reliable trade with low draw-downs.
WWW didn't have actively traded options, so I suggested a stock-only trade, although I did suggest a way to do covered calls on stocks with illiquid options.
WWW consolidated over the next month, with volume on up-close days generally overwhelming volume on down-close days. Then, in late March, WWW broke above the previous highs on above-average volume. This was a good add-to-the-position situation.
That high volume breakout in February was the initial indication of institutional participation and the late-March breakout was confirmation.
WWW pulled back to its 50-day moving average and didn't violate it, while the S&P 500 pulled back and did violate its 50-day MA in June.
This Tuesday, Wolverine reported good earnings again. It beat earnings estimates by 35% and quarterly revenue was up 88% (y-o-y).
One again, the stock responded by gapping upwards and closing higher on very high volume. This time it was followed by two continuation days with very high volume. Once again this is a good add-to-the-position situation.
WWW is now up 30% from my February 20th article. The recent breakout strongly suggests this stock has plenty of upside potential left.
When you find all the ducks in a row, meaning good fundamentals, good earnings, good technicals, and a good seasonal (a strong track record of gains in previous years during the current time frame), you are staring at what may turn out to be one of your best trades of the year.
Of course, there's much more you need to know and many more stocks you can capitalize upon each and every day. To find out more, type in www.markettamer.com/seasonal-forecaster
Copyright (C) 2013 Stock & Options Training LLC
Unless indicated otherwise, at the time of this writing, the author has no positions in any of the above-mentioned securities.
Gregg Harris is the Chief Technical Strategist at MarketTamer.com with extensive experience in the financial sector.
Gregg started out as an Engineer and brings a rigorous thinking to his financial research. Gregg's passion for finance resulted in the creation of a real-time quote system and his work has been featured nationally in publications, such as the Investment Guide magazine.
As an avid researcher, Gregg concentrates on leveraging what institutional and big money players are doing to move the market and create seasonal trend patterns. Using custom research tools, Gregg identifies stocks that are optimal for stock and options traders to exploit these trends and find the tailwinds that can propel stocks to levels that are hidden to the average trader.
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