There are three types of trends: Uptrends. Downtrends…and sideways trends. Check out this chart on Whole Foods Market (WFM) (June 27, 2016)
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Whole Foods ( NASDAQ:WFM ). This is why I’m covering this: The market is basically going to hell in a hand basket (I don’t even know where that phrase came from but somebody will tell me), but here we have Whole Foods ( NASDAQ:WFM ), which is kind of giving you a little bit of a respite from this, a respite from Brexit. First of all Brexit doesn’t impact Whole Foods ( NASDAQ:WFM ). This is where the buy points are, right down here. This is where the sell points are, right up here. We kind of want to go for the inbetweens if possible. The reason that I’m pointing this out is because I look for trends. I want to see trends that are pretty reliable. Because stocks in motion tend to stay in motion until acted upon by an equal and opposite force, which is selling on uptrends, buying on downtrends.
But here’s another kind of trend here. Look at the line here, this is the 50-day moving average. Look at the black line, which is the 200. These things are pretty close together, and so the trend here is the channel. So this last one is a little bit higher. I would say the bottom is $30.00, which means you’re really not too late in buying now. I would say this is the bottom. I would have the buy zone right here. This would be for a quick flip, it would be for a short-term trade, which is what a lot of these are. Though members we are looking at consumer staples and a bunch of other stuff that I want you just to hang on to through all this stuff. Anyway, with this you can look for maybe a 5 percent move on this. Look to sell this somewhere around 34.00 into the zone here, 35.00. With this higher low we expect a higher high, just because we’ve seen this pattern. And now we got a little bit of a breakout the last time so I’m looking for maybe 34.00 or 35.00.
Again, this is a short-term trade, but what I like about it is that you can buy the stock now with a defined risk. You can put it a little bit below 30.00 if you want. You’re risking $1.25, we’ll call it $1.30. But if this trade is going to work this stock needs to stay above $30.00. If it reverses and moves lower you don’t want to be in this trade anyway. So anyway, this is a real short-term easy trade that you look for a few dollars on, and I think you’re going to wind up getting it.
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