Technicals Are Suggesting That Westport Stock Is Set to Appreciate

Westport Stock
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WPRT Stock: The Path of Least Resistance Is Towards Higher Stock Price

I do not think I can recall a time when the months of September and October were so calm and sublime. Pullbacks that normally happen during these volatile months were absent this year, and with these months behind us, I can only envision an acceleration of the predominant bullish trend going into the year’s end. Such a dynamic will only serve to benefit compelling investments like Westport Fuel Systems Inc (NASDAQ:WPRT, TSE:WPRT) stock.

Westport Fuel Systems is a Canadian-based small-cap company that produces and engineers alternative fuel systems and components. Small-cap companies have recently caught a bid, and this sector is beginning to outperform. Compound this dynamic with the fact that alternative energy plays are also doing extremely well at this time. These factors create a perfect environment in which a nice tailwind can push Westport stock higher.

These factors are compelling, but as an analyst who favors technicals, the standout characteristic that originally piqued my interest in this investment was the bullish indications generated on the WRPT stock chart.

These bullish indications are highlighted on the following Westport stock chart.

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Westport stock chart

Chart courtesy of StockCharts.com

This Westport price chart highlights a technical indicator that is created when the 50-day and 200-day moving averages cross.

There are two distinct signals generated when these moving averages cross. A bullish indication is generated when the 50-day moving average crosses above the 200-day moving average, and this event is called a golden cross. A bearish indication is generated when the 50-day moving average crosses below the 200-day moving average, and this event is called a death cross.

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In October 2013, a death cross was generated and the bearish signal implied that a bear market was in development. While this indication was in bearish alignment, Westport stock fell from a high of $27.75 to a low of $0.82, proving that this indicator is both important and significant.

Along the way, there were three attempts at negating the implications suggested by the death cross. All these attempts were refuted and the inability to generate a bullish signal reinforced the bearish trend and the significance of this indicator.

So, when a golden cross was finally generated in June of this year, my interest was piqued because this indication finally negated the bearish implications that were first embedded four years ago. The generation of the golden cross was suggesting that a new bull market was now in development.

I originally outlined this development on August 29, in a publication titled “This Westport Stock Chart Is a Must-See,” when WPRT stock was trading at $2.46. It is currently trading at $3.70, which represents a 50.41% return.

The gains since my last my publication are impressive, and I have reason to believe that further gains are on the horizon.

The following Westport stock chart illustrates developments that are suggesting that further gains are on the way.

Westport price chart

Chart courtesy of StockCharts.com

These developments are constructive in nature; an alternating wave structure is supporting the advance toward higher WPRT stock prices.

This alternating wave structure consists of impulse waves, which are highlighted in green, and consolidation waves, which are highlighted in purple.

The impulse waves are where the stock stages an advance towards higher stock prices, and it is this wave where all the gains are captured. The consolidation wave is where the stock price stages a correction in order to unwind any overbought conditions that were created during the preceding impulse wave. Unwinding overbought conditions sets the stage so a new impulse wave can develop.

In an alternating wave structure, these waves create the necessary conditions for a trend to develop and sustain itself.

The breakout highlighted on the stock chart indicates that the consolidation wave has been completed. A completed consolidation wave suggests that a new impulse wave is now in development. Therefore, higher Westport stock prices are expected to follow. A break above $4.09 will create a new 52-week high and pave the way to further gains.

Analyst Take: 

Westport stock is a small-cap alternative energy play that is currently within the grips of a bull market that is driving the share price higher. This move toward higher stock prices is supported by a confluence of technical indicators and, as long as these indications continue to suggest that higher WPRT stock prices are on the horizon, I will continue to view this investment with a bullish bias.