A light-volume, but rough-looking Friday has turned out to be more of a lame excuse for worry rather than action. The market has turned the short Friday's future action into a farce. Still, I would stick with strength on the buy side, rather than looking for a big rotation, given the large bounce we've seen from the lows of Friday into the highs of the morning. We've got strength in food, so that's where I'm looking. But I'm not looking at where you eat. Instead, I'm looking at what you eat.
WhiteWave Foods (WWAV) has been discussed and dissected many times within these walls, and for good reason. This one has been a huge winner, now up almost 57% over the past year. WWAV has already had a strong year, and we're only through one quarter. Still, this one may not be done. The next few days should give us some quality cues for the coming direction.
After the big push in February, WWAV has leisurely consolidated a bit, all the while continuing to move higher. It's been an impressive push, as even the consolidations have gone in a bullish direction. The latest consolidation does have a slight change in character, as the price action has been more of the traditional flag moving sideways here. In March, the consolidation was more of a slow-rising bullish channel. That March move though saw a pinching of the Bollinger bands giving us a small retracement of the volatility expansion from that big February move. WhiteWave Foods continues to run along the upper band, which is something we want to see. Rejection from the upper Bollinger band was the hallmark of frustration for bulls and their breakout attempts from October through early February.
At this point, bulls simply do not want to see the midpoint of the Bollinger band, currently $43.05, break to the downside. Longer-term momentum, as shown by the 13 period RSI, is still strong. We've seen a dip out of overbought territory in the shorter-term seven-period Money Flow Index, but it is positive the stock price held in a flag during this needed pullback. Overall, trend and momentum are still with the bulls, with support coming in at $44.15 and then again at $43.05 and $42. Anything under $42 and we risk significant downside, but there should be several tree branches slowing the bulls if they fall from these heights. A close over $46 -- preferably two closes in a row -- should give us the breakout we need to see $50.
The longer-term picture isn't quite as long as I would normally like to see, due to the limited life this spinoff has seen. We only have a bit more than two years of trading on WhiteWave, so price pattern is going to be the driving force. There have not been many crossovers in moving averages or indicators to follow, so I will add in something like the Mass Index here. The Mass Index, like Bollinger bands, is a measure of volatility, which tied in well to the daily chart. Here, though, we are only looking for major expansions as a possible indication of a trend reversal or consolidation.
As I've discussed in the past with things like RSI where my concern isn't being overbought, but the decline from above overbought to under overbought, the Mass Index is the same. A push above 27, also known as a bulge, isn't an area of concern, but the subsequent move back below 27 is a concern. Once the Mass Index breaks back below 27, a trend is thought to be over and we are then waiting for a move back under 26.5 to reassess the technical picture.
In the case of WWAV, we witnessed a push over 27 for the Mass Index back in early 2014, but that did not mean anything bearish for the price. In fact, WWAV made a huge push while the Mass Index was over 27, but then in September 2014, the Mass Index dropped under 27 and WhiteWave's price began to struggle. Note the price action was not bearish, but it consolidated in a sideways pattern with about a 10% range until the Mass Index closed under 26.5. Then, shortly thereafter, we saw a bullish crossover in the moving average convergence divergence (MACD), and we reversed again. Price, momentum and trend all went higher as WhiteWave pushed 36% higher from the low in February 2015 through today. It is important to note the Mass Index did not signal this last push. It only signaled the start of a possible reversal, then the end of looking for a reversal or consolidation. For now, it does not offer us anything additional, but worth noting still since it may start moving higher again.
Overall, my focus is more on the shorter-term chart, as it gives us a clearer picture of targets, stops and current trend. While all these are bullish, I would wait for a close over $46 before buying and maintain a stop in the $42-43 area if I were already long.