Weyerhauser (WY) is a forestry stock with a nice pattern setup. As a commodity stock, we want to buy near the lows. While this week's move was aggressive, it is happening industry-wide; through mill closures to slow supply, the stocks are starting to respond. The Full Stochastic is firing off a signal on this 5.25% dividend payer. I like the higher low on the PPO momentum indicator as well. Notice how high this momentum low on the PPO is compared to the previous low. That change in momentum is the type of price pattern we see near lows.
If the stock can break through the horizontal resistance at $26.85, this chart looks like a great setup for higher prices. The close this week is above both the 10-week and 40-week moving averages.
With the price testing the major lows of 2016, it appears that an important reversal is under way.
Good trading,
Greg Schnell, CMT, MFTA
Senior Technical Analyst, StockCharts.com
Author, Stock Charts For Dummies
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