Whole Foods WFM

Whole Foods is as much a fixture in today’s urban settings as Starbucks.  Their respective stock market performances couldn’t be more different.  From the chart below illustrating the 5 year returns on both issues, it’s obvious that SBUX has been able to maintain a generally buoyant stock price while WFM has drifted substantially lower. (chart by google)

2017-02-13-1

While both issues have been flat over the past year and half we think that their fortunes will continue to diverge.  We are optimistic on Starbucks, but expect that WFM will experience another down leg soon.  We observe the monthly chart of WFM and some interesting Fibonacci levels appear:

(chart by Interactive Brokers)

2017-02-13

From the absolute low levels in 2008/2009 to the rally peak in 2014, prices have retraced first to the 50% level and then now to the 62% level where they are now moving sideways. Indeed, looking back towards earlier years, this could be construed as long term support.  Another chart shows something else which may tip the scales to the sell side:

whole-foods

We can see that the SCTR rating is abysmally low indicating lack of substantial buying momentum, the DMI indicator shows a continued trend down and money flow is not diverging.  In the absence of a rally during this very strong stage of the overall stock market, any downturn in the overall trend should be the catalyst to drive WFM lower. Accordingly, we expect WFM to break to the 17 area.

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