Whirlpool (WHR) Stock: A Great Play on the Housing Market

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Housing stocks rallied Monday on the back of the National Association of Home Builders’ housing market index coming in at a reading of 61, which represents a nine-year high in homebuilder confidence. Even though this is more of a lagging indicator, it did confirm the rally in housing stocks we have seen so far in 2015.

Beat the BellBut when the housing market improves, it’s not just homebuilder stocks that benefit. Stocks such as Whirlpool Corporation (NYSE:WHR) — a maker of major home appliances such as washers, dryers, refrigerators and more — also benefit.

WHR stock also looks technically very sound and could be a good proxy play for the housing market.

When Whirlpool earnings came out on July 22, WHR beat analyst estimates on the earnings side, but it missed on the top line. Whirlpool did, however, up its guidance for full-year earnings per share from a previous range of $9-$10 up to $9.50-$10.50. Analysts seemed to like the news as the stock gapped higher following the report.

Whirlpool (WHR) Stock Charts

Looking at the price action on Whirlpool stock through a multiyear lens, we can see that a clear line of support (blue arrow) dictates the direction higher. Although the stock has seen serious appreciation in percentage terms since early 2012, several mean reversion moves lower have kept WHR in check and away from any ultra-sharp corrections that could have violated the multiyear support/trendline.

In late October 2014, WHR stock, after finding support at the blue line, began to break out of a 12-month consolidation phase that accelerate the stock higher into its March top. The 50% rally in just four-and-a-half months, however, ultimately exhausted itself, and Whirlpool set path on a slide that found a bottom two days before the July earnings report.

From this time frame, it’s also important to note that the July low coincided with horizontal support (i.e., from previous resistance, marked by the red dotted line) as well as support from the blue trendline. So far this so-called confluence support area has held well and could have been an important pivot for the stock’s next rally.

whr stock weekly chart
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Moving over to the daily chart, we see that Whirlpool stock put in an important near- to medium-term (possibly longer-term) low on July 20 with a bullish reversal tail on the daily candle. The following day served as a consolidation and so-called “inside day,” which was followed on July 22 by a big up-gap rally to the tune of more than 7% on the back of the earnings report. WHR stock then settled into a multi-week consolidation phase and last week again began to rally.

Last Friday’s rally marginally pushed Whirlpool shares above their diagonal resistance line from the March top as well as above the 50-day simple moving average (blue line) for the first time since March.

WHR daily stock chart
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On Monday, Whirlpool further inched above these two previous points of resistance, and while WHR stock may be somewhat overbought, odds now favor a continued push higher toward the $190 area in the near to intermediate term.

Any sharp bearish reversals should be respected, but as long as the July low, WHR is still a sound bet to rally.

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Successful trading and investing starts with a plan. Download Serge’s essential trading plan, The Essence of Swing Trading e-book. As of this writing, he did not hold a position in any of the aforementioned securities.

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Article printed from InvestorPlace Media, https://investorplace.com/2015/08/whirlpool-corporation-whr-stock-housing/.

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