WMS Industries (WMS)

This stock has gained about 34% since we purchased it in July. Its initial gains were so rapid that it became an automatic eight week hold. Since that time it has slipped into a second stage flat base and appears to be a prime buy candidate should the market resume its uptrend.



Casino stocks have been market leaders, and with analyst talk of business turning around at casinos like LVS and WYNN a pick and shovel company like WMS (they sell gaming equipment) should continue to enjoy upside surprises on the earnings front. The current quarter is forecasted at 30% YOY EPS growth on a 10% sales gain.

WMS’ second stage base features low volume, a hallmark of a constructive flat base, where price trades tightly because existing holders are unwilling to sell and newcomers buy any small dips.


The base is a bit unorthodox when viewed on a daily chart. Price has been wedging higher the last few weeks, generally a no-no for this type of pattern. The base should contain price.

But on the weekly it does. Although price has spiked to new highs the last four weekly closes have all been contained within the base.


Yesterday, the start of the seventh week of the base price once again climbed towards the highs. We believe WMS is an excellent buy candidate on a high volume break out that occurs concurrent with a market reversal.