Ben asked me to take a look at WM:
How about a chart of WAMU? Looks to me (assuming current prices hold) that after converging around 43.50 all of the MAs (10,50,200) have been penetrated on heavy volume / distribution. I think next solid support at 36?
It looks like there’s “pretty solid” support just under $41 — see the January, February, March and September lows. If I had to trade WM right here I’d be looking to short it but it’s not very compelling. There are a lot of better setups out there.
I think its a more compelling short if you read the earnings report released a few days ago. In 3q05, WM earned over $300 mil on home loans; in 3q06, WM lost $33 mil on home loans. Non-performing assets are up. They made 77 cents latest quarter, missed the 92 cent estimate by a mile. At current P/E ratio of about 11, that works out to $33/share.
The rolling over chart and the big volume spikes look like major distribution to me. There is big support at $30-ish dating back to ’02 and ’03. WM just may break down that far.
I don’t know… if the earnings were so horrid I would have expected much more than a 3% drop post-report. It’s a yawner (:| for me until it breaks 40.