Even after a strong Wednesday, not every stock came out of it better than it went into it. United Natural Foods (UNFI) looked ready to break out higher three weeks ago. After two weeks of sideways action, it became clear the original breakout trigger simply wasn't going to happen.
Until yesterday, the ascending triangle still offered a hopeful trigger for bulls. Unfortunately, it was the bears who won the battle.
Not only did price lose support on Wednesday, but so did everything else. The moving average convergence divergence (MACD) triggered a bearish crossover. The Relative Strength Index (RSI) moved below 50.
The Force Index has now flat-lined, and a red day Thursday will take it into sell territory. The Commodity Channel Index (CCI) looks like a kamikaze pilot, and the parabolic stop and reverse (PSAR) indicators triggered a Death Valley pattern.
Note how the short and medium timeframe PSARs align for a "V", or downward-pointing arrow pattern. This has a history of being bearish for a stock's price. UNFI looks set to retest the August lows here, and only a close over $52 should stop out shorts.
The weekly chart demonstrates just how ugly owning this stock has been in 2015. At one time, we looked headed to $100 and now shares trade at less than half that value.
After a devastating drop, the summer bounce appears to be nothing more than a bear flag, with the potential to send UNFI all the way down to $35.
There is no momentum here, as we see the RSI struggling to stay out of oversold territory and volume keeps working in favor of the bears.
The stock has performed best when the On Balance Volume (OBV) is trading above the 20-week simple moving average.
Again, I see the $52 area as pivotal. Until UNFI closes over $52, there is no reason to be optimistic about higher prices.