Whole Foods Stock Feels Ripe for a Run

by Serge Berger | October 1, 2013 12:00 pm

Shares of Whole Foods Market (WFM[1]), 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.

wfm multi year
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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.

wfm daily
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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[2]. Sign up for his free Weekly Market Outlook Video here[3]. As of this writing, he did not hold a position in any of the aforementioned securities.

  1. WFM: http://studio-5.financialcontent.com/investplace/quote?Symbol=WFM
  2. The Steady Trader: http://thesteadytrader.com/
  3. free Weekly Market Outlook Video here: http://www2.marketfy.com/l/15492/2013-05-06/4sf47

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