
Whole Foods Market Stock Is About to Move Sharply Higher -- Here's Why
Whole Foods Market (WFM) is offering investors an delicious opportunity to profit, detailed technical analysis shows. The stock is very oversold and poised to rally higher, so it's time to load up on shares.
The stock's decline from the October 2013 high near $64 is an enormous, yet corrective, one. We have labeled it in the monthly bar chart below as (A) down, (B) up and (C) down. For perfection, (C) could trickle down a few more points until the $27 +/-$2 range is further probed. But that's not required. Why not? There are just too many indicators that are included in the decision support engine's hunter/seeker algorithms that are at extreme oversold levels. Under these conditions, investors and traders should consider only buying actions right now.
Click here to see the following chart in a new window
The easiest thing to notice is the double bottom the stochastics are making by being below the 10% oversold extreme. With the stock making lower lows in price right now while stochastics are as low as they were when the stock made a bottom last year, there's a bullish divergence buy signal.
As this is occurring, the current decline is about to enter the green box, where buying is ideal. Whether or not the stock tests the $27 +/-$2 zone, the rubber band is stretched about as far as it historically gets before a sharp bounce in the opposite direction occurs. Back in July 2014, that action/reaction created a low near $36, and a bounce to $56 (a 55% rally).
Now, as the double bottom forms with stochastics, we can look back to the last time a double bottom formed, in 2007-2008, and see that the stock's price reversed from the sub-$5 zone before rising all the way to $64 (an 18-fold rally).
So savvy investors would begin buying actions now. If you're short and have already profited from your trade, use buy stops at $34 to protect your profits. If the goes lower, to the $27 +/- $2 zone before moving back above $34, that lower zone would be ideal for covering your short position and establishing a long position. If you have flat exposure to the stock, these parameters can be implemented to establish long exposure. If you already have a long position, maintain it and add to it when the stock's price is between $27 and $34.
As the blue arrow on the right anticipates, the rally out of this price zone should greatly exceed the former highs, near $64, and allow a multiyear rise toward the mid to high $70s, with higher bullish prospects thereafter.
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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.









