$WING - VCP Pattern

greenmtns Updated   
NASDAQ:WING   Wingstop Inc.
VCP: 10w 19/4 3c

+ higher lows (but not ascending triangle).
+ Proportional
+ tight consolidation above 21d ema
- below 50dsma
- downward trending RS line below MA

Trade Plan:
  • Entry: DTL Breakout, starting position.
  • Risk: ~3%, with stop below $191.88
  • Add on breakout of current consolidation over 197.81, which is above the 50dsma and can be financed by early DTL BO entry.
Trade closed: stop reached:
The DTL BO failed and stop was hit at the bottom of tight consolidation.
Below the 50-day sma and early entry is riskier than waiting for the break above the consolidation pivot above the 50-day sma.
The pullback structure hasn't completely failed and the DTL is still active.
There is high volume support on 6/23 with a low of $181 and recent support on 7/7 with a low 184.01.

I still like this setup because
1. We're pulling back into the ascending 150dsma AND 2021 highs after a breakout into ATH's. This is a "logical" area of support.
2. the VCP could be evolving and tis may still be part of the 2nd contraction if it stays above the 7/7 low.
3. Long term trend is still higher. Med and short term is lower.
4. Improving Fundamentals AND 4 consecutive quarters of increasing fund ownership.

This would be a second attempt, early entry, therefor a smaller position size.
Entry: DTL BO, starter position around $188
Stop: total risk ~3% by splitting the stop into two: 1st: 50% 183.83 (below 7/7 low) and the 2nd: 50% at 180.79 (below the 6/23 low)

If WING and the market continue to pull in, the next area of interest on WING is around $175.
A good example why it's important to obey stops and cut the loss without hesitation. On Friday, the stock sliced through its 200-day sma on 270% average daily vol.

This could be the beginning of a stage 4 decline or a shakeout and reversal recovery on upcoming earnings surprise. The company reports earnings on 8/2. Personally I set an alert at the 200dsma to be alerted if WING gives a reversal recovery on a surprise earnings announcement.

I'm not going to think about it or comment on this one anymore as the original VCP idea failed to the downside.
The Idea didn't work out to the upside unfortunately. Ate up 3% risk and moving on.
WING will need a new setup to consider another entry.


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