Trade of the Week for November 1, 2016
Always nice to start the week off strong with a cheap stock that moves big! This week we will focus on WFT, Weatherford International, which gave us good trades as both a buyer and short seller. This particular stock which opened at $4.85 and hit a low of $3.83 had sold off as a result of a negative report by Wolfe Research. The report claimed that Weatherford may need to sell hundreds of millions of dollars’ worth of shares in order to meet its debt covenant requirements.
Fausto first called this out as a good short opportunity which proved to be quite profitable. After finding support around $3.90, WFT broke its downtrend and we noticed buyers entering above the $4 level (we were looking to go long). At this point, a halt was placed on the stock due to pending news; which ended up being WFT assuring investors and shareholders that it will meet all debt covenants at the end of the year. This was good news for WFT, as it increased from $4 up to over $4.50 giving us good trades in both directions.