While only a penny stock in the sense of it trading under $5 per share, shares of WMMVF, which happens to be Wal-Mart (NYSE:WMT) of Mexico is certainly no small company. We've highlighted it today because of what appears to be a significant breakout in Friday's trading.
We’ve annotated a more than year-long uptrend in the chart which made the chart look technically appealing, however a key resistance around $3.10 has held back the bulls for close to a year as each attempt to break through this level was met with selling pressure.
Well, on Friday it appears that the bulls finally succeeded in breaking through that critical technical level on increased volume, something that we want to see. While U.S. markets are closed today, we are looking to enter this stock on entry tomorrow. With the stock market firing on all cylinders of late, and this company in a year plus uptrend, Friday’s breakout looks to be the catalyst that could finally deliver some near-term gains.
Looking higher, we have to look back several years before we see further levels of resistance. The only major level we keep seeing pop up in our analysis is the $3.40 and $3.50 resistance levels. As such, we would look to exit this trade at $3.39.
As for support, we would watch the recently broken resistance turned support of $3.10 to now be a buffer on any pullback. Below that, further support will likely enter the picture at $3.00 and $2.90. Should shares start to pull back and fall below the $3.00 support, we would become concerned that the recent uptrend may be faltering so we’d set a stop loss at $2.98.
As mentioned off the top, we would look to enter this stock on strength on Tuesday. Based on Friday’s closing price ($3.11) our upside potential looks to be 9% while our downside risk is limited to 4.2%. Usually shares tend to rally hard after key technical breakouts so we’d expect this trade to be completed in the next month or two if all goes to plan.
