Winnebago Industries, Inc. (WGO) makes motor homes and recreational vehicles that are becoming more luxurious as the economy grows. The stock closed Thursday, June 13, at $36.23, up 49.6% year to date and in bull market territory, rising 83.3% since trading as low as $19.77 on Dec. 18. The stock set its 2019 high of $37.81 on June 14.
Analysts expect Winnebago to report earnings per share of $105 when it discloses results before the opening bell on June 19. Wall Street expects improved year-over-year earnings, but revenue may have slumped.
The daily chart for Winnebago
The daily chart for Winnebago shows the formation of a "golden cross" on April 18 when the 50-day simple moving average rose above the 200-day simple moving average to signal that higher prices lie ahead. When this signal occurred, the stock was trading around its annual pivot at $35.75, which was a magnet between April 16 and May 7, then again since June 10. Above are the semiannual and quarterly risky levels at $39.95 and $44.80, respectively. The monthly value level lags at $26.59.
The weekly chart for Winnebago
The weekly chart for Winnebago is positive, with the stock above its five-week modified moving average of $34.29 and above its 200-week simple moving average, or "reversion to the mean" at $31.32. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 66.76 this week up from 66.24 on June 7.
Trading strategy: Buy Winnebago shares on weakness to the 200-week and 200-day simple moving averages at $31.32 and $30.88, respectively, with its annual pivot at $35.75. Reduce holdings on strength to the semiannual and quarterly risky levels at $39.95 and $44.80, respectively.
How to use my value levels and risky levels: Value levels and risky levels are based upon the last nine weekly, monthly, quarterly, semiannual, and annual closes. The first set of levels was based upon the closes on Dec. 31. The original semiannual and annual levels remain in play. The weekly level changes each week; the monthly level changed at the end of each month. The quarterly level was changed at the end of March.
My theory is that nine years of volatility between closes are enough to assume that all possible bullish or bearish events for the stock are factored in. To capture share price volatility, investors should buy shares on weakness to a value level and reduce holdings on strength to a risky level. A pivot is a value level or risky level that was violated within its time horizon. Pivots act as magnets that have a high probability of being tested again before their time horizon expires.
The close on June 28 is the second most important for 2019. This close is an input to my proprietary analytics and will generate new weekly, monthly, quarterly and semiannual levels.
How to use 12 x 3 x 3 weekly slow stochastic readings: My choice of using 12 x 3 x 3 weekly slow stochastic readings was based upon backtesting many methods of reading share-price momentum with the objective of finding the combination that resulted in the fewest false signals. I did this following the stock market crash of 1987, so I have been happy with the results for more than 30 years.
The stochastic reading covers the last 12 weeks of highs, lows, and closes for the stock. There is a raw calculation of the differences between the highest high and lowest low versus the closes. These levels are modified to a fast reading and a slow reading, and I found that the slow reading worked the best. The stochastic reading scales between 00.00 and 100.00, with readings above 80.00 considered overbought and readings below 20.00 considered oversold.
The author has no positions in any stocks mentioned and no plans to initiate any positions within the next 72 hours.