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Trade of the Day: Whirlpool Stock Is Flashing All the Right Buy Signals

Serge Berger

Lately, the environment for U.S. stocks has favored a pure “trading-the-range” approach where one buys the dips but sells any rallies. Case in point, shares of Whirlpool (NYSE:WHR) have traded in a well-defined range since February and recently once again arrived at the lower end of the said range where a buy trade looks to be set up in WHR stock.

Trade of the Day: Whirlpool Stock Is Flashing All the Right Buy Signals

Source: Nicola via Flickr

For some perspective, allow me to say a few words around Whirlpool being in the consumer discretionary sector of the S&P 500. Consumer discretionary stocks are exposed to consumer confidence, which in part is sensitive to inflation. The recent flare-up in trade tensions between the United States and China has led to new tariffs, which ultimately will get passed on to the consumer by way of higher prices for consumer products such as those that Whirlpool makes.

While Whirlpool’s products are largely made in the U.S., it would be enough to soften demand if only some input parts of its products are made in China, or similar products from other companies are going up in price.

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WHR Stock Charts


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Looking at the price movements of WHR stock on the multi-year weekly chart, we see that the stock’s lower high in 2017 ultimately led to a lower low in the fourth quarter of 2018. While the stock did bounce back in Q1 2019, the rally has found a well-defined ceiling and trading range that traders can now focus on for opportunities.

 

On the daily chart, we see that since February, WHR stock has been oscillating back and forth between around $145 on the upside and $127 on the lower end. The lower end of this range is currently also supported by the stock’s red 200-day simple moving average. This is helpful as any break and hold below the $126 level would be a clear stop loss signal for any trading longs.


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On Tuesday, May 21, my Market Rover scanner flashed a B2 reversal buy signal in Whirlpool stock. The next upside target now becomes the $140 area and the aforementioned stop loss can be used.

My absolute favorite way to trade the type of set up we are seeing in WHR stock is by using a simple but specific options strategy. I am holding a special webinar to teach this strategy to InvestorPlace readers. Register here.

As with any good trading setup, what I like about the trading setup in WHR at the moment is that we have a visually very well-defined stop loss area around the $126 mark. This helps us manage risk in a trade, which ultimately is the most important aspect to any trading opportunity.

Attend Serge Berger’s special webinar: The highest probability options strategy for income. Click here to register.

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