Eyes on the Organic Food Chain
- Posted by Greg Harmon
- on December 20th, 2012
The natural and organic food space has been beaten up badly. Whole Foods Markets, $WFM, The Fresh Market, $TFM and Hain Celestial, $HAIN, are all well off of their highs and frankly showing no reason to buy their stock. But their biggest supplier United Natural Foods, $UNFI has many reasons to buy it. The weekly chart below is a good place to start. Notice the Andrew’s Pitchfork, bullishly pointing higher. The price is being pulled to the Median Line after a brief move below it. The
Median Lines show clearly the trend is higher. Notice where that turn back higher happened. It found support at the 50 week Simple Moving Average (SMA). But it was also a near exact 38.2% retracement of the last leg higher. The supporting indicator, the Relative Strength Index (RSI) is moving higher with gusto and near a break into bullish territory. Finally it also has positive news, as it is being added to the S&P SmallCap 600 Index after the close on Friday. How high will it go? Applying a Harmonic AB=CD creates a Potential Reversal Zone (PRZ) between 78.71 and 79.05 sometime in late August 2013. Not a bad long term pick for 2013. And if the stock does continue to rise can the stores themselves be far behind?
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Gregory W. Harmon CMT, CFA, has traded in the Securities markets since 1986. He has held senior positions including Head of Global Trading, Head of Product Development, Head of Strategy and Director of Equity. (More)
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