Weight Watchers Decline 17%, Monthly Graph Analysis (WTW)

Weight Watchers International (NYSE:WTW) didn’t escape last week’s Wall Street sell off and dropped 17% on Friday. The stock was the biggest loser in Personal Services industry but also the most active stock in terms of volume traded. Many investors are dumping their shares nowadays judging by the phenomenal decline of worldwide stock exchanges, Weight Watchers’ stock though did not come out of nowhere. Trading WTW stock since 2009 has resulted to substantial gains as the stock climbed from $16.41 all the way up to $86.97 two months ago. Traders need to take their profit at some point and apparently they have done so. Technical analysis on the monthly graph show potential entry points for new long trades in the following months, so don’t be upset if you ignored Weight Watchers stock!

WTW Stock Monthly Graph

WTW Stock Monthly Graph - Fibonacci Retracement Levels

Clearly the stock is uptrending at least for a year following a 2 year decline from $57 to $17 according to the monthly stock graph. The uptrend support line (green) is way below current price, therefore patience is needed for anyone looking to invest in the Services company of 4.51B capitalization. Further analysis show levels that the stock is likely to bounce or at least meet some resistance during its fall. 38.20% and 61.8% Fibonacci retracement levels align perfectly with previous verified support and resistance levels. Notice how many times each level has been verified by the WTW stock price in the last 10 years’ period, adding a lot of credibility to those levels. Since traders will be looking for long entry points, I consider $57-58 and $40-41 levels very important. Of course, daily charts will help investors to point out major candlestick continuation patterns – regarding the long term uptrend – or reversal formations considering the recent downtrend.

Most likely I predict a meet up between the 61.80% Fibonacci retracement and the uptrend support line sometime in the future making it a perfect opportunity to buy WTW shares with a tight stop loss. On the other hand if the stock won’t fall below the 38.20% retracement level, technical analysis implies bigger and faster gains in comparison with a 61.8% retracement.

Disclaimer: I don’t hold WTW shares at the moment.