At the start of 2014 with $BIG at $26 I went long via call contracts and thought a $BIG move was coming. That move came and then some as the stock soared almost 100%. Last month I said $BIG would see a $BIG pull back... it did. This summer I bought calls contracts on $WFM when the stock traded at $36 and saw a move to $50 coming. The stock recently hit $49.50.
Now I see $WFM pulling back. Actually from a longer term time frame I see an even bigger pullback possible. What made me change from love to hate in 3 months?
- A 35% upside move.
- A bearish possible chart formation.
- Long term resistance failure.
You can look at all the numbers, financials, EPS, growth, but to me price is all the matters. What are investors willing to pay for the stock.
Right now that price isn't more than $49. The more times that line fails the less buyers are around to keep the stock bid. This is why I think it falls short term. Longer term the chart is in the midst of a long term head and shoulder pattern. This will bring the stock down to $35 or less.
With $BIG earlier this year, the stock languished at $26 before finally embarking on its near 100% move. It didn't happen right away. Same here with $WFM now and this summer. As much as I would like the move to happen right at the open, I know the odds of some frustrating trading sessions are there. I have $WFM puts on set and forget.
$WFM weekly $47.50 puts at $.26
$WFM January 2015 puts $49 at $1.50