Not all ships rise and fall with the tide

WEC energy group is another stock bucking the current bearish sentiment of the leading US indices, and continues to maintain a longer term bullish trend despite a rising VIX and sustained falls in the Dow, S&P500 and NQ100 yesterday. But what is particularly revealing about such stocks and their price behaviour is this. If such a stock can continue to rise when indices are falling, the likely impact of rising markets should help to propel this stock higher with momentum, whilst others which have followed the indices lower, simply recover lost ground. Adding further to this principle is the fact this stock has followed the pattern of many others during the rout of early 2019 plus we have some interesting volume price analysis lessons, in particular, note the greatest volume on the chart that arrived in mid March was accompanied by a narrow spread up candle. So double the volume of the preceding candle yet half the spread of price action – a clear anomaly.

It was no surprise, therefore, to see the stock sell off over the following weeks, but note the wicks to many of these candles, they are all to the lower body suggesting price support and buying into the weakness to be followed by the two bar reversal in mid April. This has provided the springboard for the current rally once again characterized by lower wicks and rising prices on good volume. Immediately ahead on the weekly chart we now have a low volume node, and with little in the way of price resistance, and no doubt helped with a recovery in the indices, should take the stock through the minor resistance at $80 and on towards $81 and beyond in due course.

By Anna Coulling

Charts from NinjaTrader and indicators from Quantum Trading