Put Winn-Dixie In the Top Stocks Bag
In recessions grocery stores are supposed to be solid performers as the thinking is folks still have to eat.
My first thought when I look at the chart of
Winn Dixie
(WINN)
is that it is a base, or at least trying to build a base. My second thought is, if everyone is so scared of recession, then why hasn't WINN already broken out?
However, there is a base building there, represented by the black and red flat lines drawn on the chart. I would also note that volume has risen (circled on the chart) on each of the last two rallies to resistance around 19.
A pullback now that holds above $16 (it's important to understand that we do not want to see a lower low than the previous low) and then rallies ought to yield a breakout through the upper boundary of that base. But it will need to be accompanied by volume. This is because breakouts on light volume are always suspect.
Should that breakout occur, I'd expect the initial rally to halt at the next area of resistance around $22-ish. As you can see I've circled that spike high around $22-$24. Spike highs (and lows) tend not to break the first time up (or down). In addition there is the longer term downtrend line which comes in around $22 that should act as resistance the first time up.
In sum, as long as WINN holds above $16 on this current trip down, it has a good chance of breaking out through $19 with an initial target in the low $20s.
Know What You Own: Winn Dixie operates in the grocery industry, and some of the other stocks in its field include Wal-Mart (WMT) - Get Report, Target (TGT) - Get Report, Kroger (KR) - Get Report, Safeway (SWY) and Supervalu (SVU) . These stocks were recently trading at $53.98, $52.77, $25.66, $29.73 and $30.85, respectively. For more on the value of knowing what you own, visit TheStreet.com's Investing A-to-Z section.
At the time of publication, Meisler had no positions in stocks mentioned, although holdings can change at any time.
Helene Meisler writes a daily technical analysis column and TheStreet.com Top Stocks. For more information,
. Meisler trained at several Wall Street firms, including Goldman Sachs and SG Cowen, and has worked with the equity trading department at Cargill. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. She appreciates your feedback;
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