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Why and when to buy WWE stock as it attempts a breakout

on Oct 26, 2022
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  • WWE stock has returned 58% YTD and remains bullish.
  • The stock is good as a momentum buy or longer-term hold in a depressed market.
  • WWE could retreat to the bottom of the ascending channel before proceeding higher.

If you are looking for that Alpha stock in the market right now, World Wrestling Entertainment Inc. (NYSE:WWE) fits. The stock carries both defensive and momentum features that should attract investors.

With a return of 58% year-to-date, WWE has weathered the storm well as the stock market tumbles. Compare the returns to a negative 19% for the S&P 500 composite – Quite defensive and high return, right?

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WWE currently trades at $79. Investors tracked by TipRanks have a majority of 5 buys, 2 holds, and 1 sell. The price average price target is $82. We think the stock could hit $100. However, we believe the stock is a sell for short-term traders at the current price. Not that the fundamentals are bad, but because we think the technicals point so. Here is why. 

Momentum is a crucial feature you would not easily want to overlook for WWE. The stock has been trading in an ascending channel since January. The stock’s price action has become so predictable that you can tell its bottoms and tops. These are clear entry and exit zones for investors trading in the short term. Check the chart below:

WWE hits the upper bound of the ascending channel

Source – TradingView

WWE trades on an ascending channel after making higher tops and higher bottoms. Going by the historical price pattern, the current price level is a sell zone. The price could crash back to the bottom of the channel before attracting more buyers. The projection also relates to the overbought conditions, with the RSI currently at 73.

A correction could see the stock trade slightly above $71, coinciding with the lower trendline and/or 50-day MA. 

What should you do?

This article finds it appropriate to consider buying WWE at the bottom of the ascending channel. For longer-term holders, the established resistance lies higher at $100. The stock could also face resistance at $85.