The great outdoors are calling! Let’s look at $THO and $WGO. (July 22, 2020)
THO WGO
This is Scott with your Free Chart of the Day. I want to take a look at two kinds of camping stocks. It seems like summertime is here, the great outdoors, they’re calling us so let’s take a look at two charts right now.
This is Thor Industries ( NYSE: THO ). If I zoom in it kind of has a little bit of a cup with handle pattern. You can see a little bit of a rounded bottom, a little short shelf here. And yesterday it moved up, it moved up on higher than average volume, today it stopped right at resistance. Now, this is a good thing because this gives us clearly defined levels to define our risk off of.
So what I want to see here on Thor Industries ( NYSE: THO ) is a break of this resistance here. You can see how the stock stopped there, got rejected, came back, and so we are now here at a point where anyone who didn’t sell here, potentially, could be selling here. And so we want to see a break up above 118.90. A break and a hold above 118.90 because that means that anyone who bought here and then held through all of this is not going to sell to try and get back to break-even.
That is kind of the psychology behind the cup and handle pattern. Now ideally, a cup and handle pattern is longer than a month and a half or so but this looks pretty good. Here on the daily chart, we want to see a break above 118.90. If we do break above that level on the daily chart not only are we breaking above this resistance but that takes us to a new weekly high here. So I like that here on Thor Industries ( NYSE: THO ); I have an alert here at 118.90.
Another camping stock, really quick, that I want to take a look at is Winnebago Industries ( NYSE: WGO ). This one has kind of a different pattern here, this one is closer to support. It is down here closer by the 200 and the 50-day moving average. You can see here on Winnebago ( NYSE: WGO ) how yesterday, Monday, it took out this kind of downward sloping trendline here. And when it did it, it did it on decent volume. Today we moved above that level, did it on even higher volume so there is more volume coming into this stock.
What I like about this setup specifically is, (1) it is different from the last one that I showed you. But with this one, we are really close to support so you could buy the stock here and put a stop just below the 50-day moving average. Now, that’s about 8 percent risk so you would want to manage your position size because that is almost 6 points that you are giving up, for me that is kind of a lot.
If I am risking that much to start a position I usually like to manage my size a little better and have a smaller position size. I am okay with a little bit of gyration back and forth as long as we are staying above this low right here; because this low right here is established support and it’s a higher low compared to these down here.
So I want to see a move above 66.30 here on Winnebago ( NYSE: WGO ) and again you would want to stop just below the low here, that’s around 60.86. And again, that is risking about 8 percent or so.
So there are two trading ideas to get you in the summertime mood and hopefully, out of the house.
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