* This was supposed to be posted last week but somehow was overlooked*
In 2012, investors relearned the painful lesson that every stock inevitably goes down hard. We saw high profile momentum names like; $AAPL $DECK $CMG $HLF and countless other stocks see reverse long term uptrends and billions of dollars of equity erased. Looking to 2013, there is no reason to think we will not see some more high profile stocks implode.
Whole Foods ($WFM) has been in a tremendous uptrend since early 2009, the stock has seen more than a tenfold gain off its lows to the highs in 2012 and now the stock is looking vulnerable. Looking at the longer term chart, you can see that the stock is not a stranger to a large selloff, it suffered a 90% drop off its 2006 highs to the 2008 low. The inset chart shows that while $WFM was up on the year, the stock appears to be under distribution over the last three months. With the 50 day moving average (green) declining and the 200 DMA (black) now turning sideways, it looks as though WFM could be at the beginning of a decline which could see the stock completely erase the gains of 2012.
Right now I have a short bias on the stock and only getting the price back above 95.50 would change my mind that the stock remains risky to own. I am not questioning the fundamentals of the company, as far as I know the business of selling overpriced groceries is still strong. What does come into question is the chart pattern.