Don't Ignore This Chart!

This Indicator Says Whole Foods (WFM) Is Under Accumulation

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Whole Foods Market (WFM) has been trading in sideways fashion for the past several months and its long-term weekly chart isn't one of the strongest.  But there are signs that better fundamental days lie ahead based on technical signs of accumulation.  Below is a daily chart of the WFM for the past 8 months:


Notice that while prices moved lower in February, the Accumulation Distribution Line (ADL) was well off its low.  The blue arrows mark many heavy volume days and if you look at the accompanying daily candlestick, you'll see that most of those high volume days saw WFM close at or near its high of the day.  That action triggers upside movement in the ADL, which is very apparent with WFM.

The red arrows mark two key levels of price resistance.  Breaking above those price highs with a strengthening ADL would be solid confirmation of a stock potentially under accumulation.

Happy trading!

Tom

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Tom Bowley
About the author: co-founded Invested Central in 2004 and served as the site's Chief Market Strategist for more than 10 years. Invested Central provides stock market education and guidance for those interested in making their own financial decisions. During his tenure at Invested Central, Tom co-hosted Market Open LIVE, a national radio broadcast that covered many of the largest markets across the U.S. In addition, he has spoken at various conferences throughout the United States and Canada and has taught thousands of traders across the globe how to trade equities more wisely with an emphasis on managing risk and intermarket relationships. Learn More
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