Don't Ignore This Chart!

Waters Corp (WAT) Tests Key Gap Support - Could be a Great Trading Opportunity!


When a stock gaps higher and keeps running, it generally tells me that the top of gap support is what we need to concern ourselves with. It's definitely not a guarantee that it holds, but the odds are greater. When I trade stocks, it's all about trying to situate the odds in my favor. On July 15th, Waters Corp (WAT) saw an extremely positive reaction when it raised its revenue guidance. At one point during the trading day, WAT was up more than 20% on the news. Since that time, however, we've seen the actual quarterly results come in and WAT has moved all the way back down to the top of gap support, despite beating consensus estimates in terms of both revenues and EPS. Earnings saw a very strong beat, $2.10 actual vs. $1.53 estimate. Patient investors/traders could be rewarded now, though, with WAT back at key gap support:

We never know for sure which direction a stock might turn, but I do know this: buying WAT at its current level provides a much better reward to risk opportunity than buying it 2-3 weeks ago. (Disclosure: I own WAT shares.)

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Happy trading!

Tom Bowley, Chief Market Strategist

Tom Bowley
About the author: is the Chief Market Strategist at, where he provides stock market education, guidance, and trading strategies using a unique combination of technical, fundamental, and historical analysis. Tom provides members with four portfolios (Model, Aggressive, Income, and Value), all designed to beat the benchmark S&P 500, and a revolving Watch List of hundreds of companies reporting strong quarterly earnings (must beat both revenue and EPS estimates) and exhibiting technical strength as well. These companies comprise EarningsBeats' annotated Strong Earnings ChartList (SECL), from which Tom trades exclusively. Tom writes a Daily Market Report (DMR) for members to include an executive summary, market outlook, sector/industry watch, and trading ideas. Learn More
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