June 7, 2012 (By Frank Kollar)
Yesterday we wrote that Whole Foods Marketing (NYSE: WFM) could soon breakout. On Wednesday, June 6, WFM did exactly that on high volume.
Yesterday we wrote; WFM reached rally closing highs and 2012 highs on May 3, 2012. Since that date WFM has been trading in an ever tighter band, with rallies reaching lower highs and declines reaching higher lows. This has created a pennant pattern on the daily chart. Typically when a stock breaks such a pattern it continues in the direction of the break. Also, stocks usually break in the direction of the prior trend, in this case an uptrend.
Today's breakout to new highs was also a breakout of the pennant formation and a bullish indicator for this stock.
Chart Courtesy of StockCharts.com
WFM has support at $84.50. A bullish entry at current levels offers a low risk trade with a stop at support.
If WFM should go to at least $93.89 and could test $100 a share in coming weeks..
The Fibtimer.com (http://www.fibtimer.com) Stock Timing Strategy does hold a position in Whole Foods Marketing.
Disclosure: I am long WFM.