At the very least, my intermediate-term pattern work in Walter Energy (WLT) argues strongly that the 27.5% decline from April 8 to June 20 represented a completed corrective phase, if not an entirely completed correction.

In either scenario, the price structure should be in a recovery period that projects into the 132.00-135.00 target zone, at which point investors will find out if WLT is "stuck" in a wide range trade or accelerates into a new bull leg.

To really get some upside traction, however, WLT must hurdle near-term resistance at 117.00/50, which if achieved should trigger continuation to 121.40/70 next.

Let's notice the sharply rising 200 DMA (pink MA), now at 115.37, which represents important support as WLT attempts to create a base in the aftermath of its sell-off from the 124.59 high on July 5.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.