Shares of Whole Foods Market (WFM), the well-known operator of natural-foods supermarkets, continue to act well despite jitters in the broader U.S. stock market. Of course, Whole Foods stock doesn’t need much introduction to the trading and trend-following community, as it has been on a true tear since late 2008 and has been one heck of a trending stock ever since 2000.
WFM has the beautiful characteristic of either strongly trending up or strongly trending down on the longer-term time frames while spending little time trotting sideways. No wonder traders enjoy Whole Foods stock so much — which is to say, this characteristic feeds on itself as traders take advantage of it.
Although WFM is currently higher by just about 28%, its path was rather choppy through a little more than the first four months of the year. Characterized by a big down-gap in February and a large up-gap in early May, Whole Foods stock ultimately calmed down somewhat in the first half of the summer before resuming its swings … albeit in a less jerky fashion.
After a weak rally attempt in July, WFM again slipped into the early summer consolidation phase in August, which ultimately only served as a retest of support before taking off in the early September rally along with the broader market. Like most other shares, Whole Foods stock rallied on Sept. 18 as a result of the “no taper” decision by the Federal Reserve.
Unlike the broader market, however, the subsequent selling in WFM shares was much less on a percentage basis, and Whole Foods now is only about 1% below its year-to-date highs, compared to more than 2.5% for the S&P 500.
Furthermore, during the past two weeks, WFM’s consolidation pattern came in the form of a bullish wedge, which looks to be ready to accelerate to the upside, while at the same time offering traders a good line in the sand at $57.60 on the downside.
Serge Berger is the head trader and investment strategist for The Steady Trader. Sign up for his free Weekly Market Outlook Video here. As of this writing, he did not hold a position in any of the aforementioned securities.