A Major Breakout for Whole Foods Market

I first identified a potential bottom in Whole Foods Market (WFM) back in July. The following month I became even more convinced of a bottom after a rumor of Carl Icahn’s involvement allowed me to sell another round of call options at a nice profit. After that trade, I made another swing trade with shares in what was essentially becoming a trade-the-range strategy.

So, I can only shake my head at a major missed opportunity as Whole Foods Market made a major breakout after last week’s earnings.

Source: FreeStockCharts.com

I had no position on going into earnings. In fact, it did not even occur to me to make sure I had a position going into earnings. Sure the stock was hurtling to the top of the previous range going into earnings, but I had no reason to think at the time that a major breakout from this range was imminent.

Without even knowing the news or even reading the earnings report, WFM prints as a clear “buy-the-dip” opportunity now. The stock gapped up and closed with a 12.1% gain in the trading day following the earnings report. The stock closed near its high of the day well above the upper-Bollinger Band (BB). Even MORE impressive is the stock’s ability to press forward with a 4.4% follow-up gain even further above the upper-BB. Buyers are definitely scrambling to get back into WFM in a sharp shift in sentiment.

I am not even sure trying to interpret the fundamentals in this situation is useful. It was surely the fundamentals which drove investors to dump WFM overboard in May for a major breakdown. Those sellers are experiencing major regret right now. Just six months later, investors and traders have practically made the exact opposite conclusion as that May gap has almost filled. Traders and investors looking to go long WFM should treat any pullback toward the 200DMA as a gift. I will at least.

In honor of this major bullish moment, I cannot help myself in reposting this incredibly funny video by a rapper from my hometown (and high school even): “Whole Foods Parking Lot.” Traders better find a spot quick…the quinoa is flying off the shelves…

Be careful out there!

Full disclosure: no positions (regrettably!)