Adam Lemon has been the Chief Analyst at DailyForex since 2013, where he brings a wealth of knowledge to the trading community. A practitioner in Forex, stocks, and other financial instruments, Adam emphasizes that retail traders can achieve positive returns over time through diligent risk management, trend following, and resilience through temporary losses, provided they engage with reputable brokerage firms.
In recent market analysis, Lemon has highlighted a short trade opportunity for Waste Management (WM), a company included in the S&P 500 index. The analysis suggests entering a short position within the price range of $211.71 to $219.48. The technical outlook for Waste Management has emerged from a bearish chart pattern, characterized by declining bullish volumes and ongoing market concerns.
Market sentiment has shown a weak start with equity futures declining after a three-day rally attributed mainly to advancements within AI sectors. Significant economic data is anticipated, featuring an initial look at the third-quarter GDP and updates on the Personal Consumption Expenditures (PCE) price index for the months of July, August, and September. Ongoing geopolitical tensions have been influencing gold and silver markets, particularly with rising friction involving Venezuela and China.
The fundamentals of Waste Management reveal potential concerns, including elevated debt levels and increasing capital expenditures, some driven by share buybacks and dividends aimed at appeasing institutional investors. This has led to high valuations and a contraction in free cash flow, which raises doubts regarding the potential for significant upside. The price-to-earnings (P/E) ratio for Waste Management stands at 34.59, considerably higher than the S&P 500’s ratio of 29.01.
While the average analyst price target for WM is set at $246.48, suggesting an attractive upside, significant downside risks persist. Today’s analysis of Waste Management’s technical indicators shows bearish signals; higher average trading volumes during downturns compared to upticks, stagnation against the rising S&P 500, and a bullish Bull Bear Power Indicator with negative divergence all contribute to a cautious outlook.
For those considering a position in Waste Management, Lemon recommends a short entry within the specified price range, with a take-profit target between $188.29 and $194.11, and a suggested stop loss positioned between $222.46 and $229.50, indicating a risk/reward ratio of 2.18.
As trading conditions remain volatile, investors are encouraged to stay informed and proactive in their trading strategies, particularly in the context of current market dynamics.