Buying the Selling in Weight Watchers

Could it be that a new round of New Year’s resolutions to lose a few pounds are powering the bull market in Weight Watchers International (NYSE: WTW)? Up more than 35% from its opening price on January 3rd, Weight Watchers has been an excellent intermediate term investment for those who picked up shares at the beginning of the year. But the stock has been a no less sterling, short-term trading opportunity for more active investors looking to take advantage of short-term volatility in uptrending markets.

Shares of Weight Watchers rallied back above their 200-day moving average in the first half of January. And by the end of the month, the stock was trading at its highest level in since August 2011. These new highs and the accompanying overbought conditions encouraged profit-taking, which sent shares of WTW sharply lower in the stock’s pullback since returning to bull market territory.

Thursday evening, with WTW down three out of the last four trading days – including two in a row – and finishing in technically oversold territory, we noted the stock in our daily newsletter, 7 Stocks You Need to Know.

6. Weight Watchers International (NYSE: WTW)

Dramatically selling off almost as powerfully as Ryder Systems on Thursday were shares of Weight Watchers International. WTW climbed back into bull market territory in the first half of January, rallying to take out the November 2011 highs. And after trading sideways for a week, shares of WTW now are in pullback mode, dropping by more than 4% ahead of trading on Friday.

Weight Watchers International has a short-term, edge of more than one and a half percent in the short-term, and a “consider buying” rating of 8 out of 10.

Friday morning, Weight Watchers opened higher by more than 1%, and ended the day with a gain of nearly 2%. But buyers weren’t finished with Weight Watchers. Three days later, the stock was up more than four and a half percent. And by the time Weight Watchers rallied to new, two-week highs, the shares had added more than eight and half percent since we highlighted the stock in 7 Stocks You Need to Know.

WTW chart

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