HAIN Gap Analysis:
Hain Celestial has given back all of its post earnings price action, but the question now is…will it give back its earnings gap up. HAIN has a short interest of nearly 11%; this figure has interestingly enough been tracking up with the stock as shares have raged over 90% YTD. The 50 day is roughly at $61; which is right on the 50% Fibonacci retracement level. HAIN also had a textbook dark cloud cover bearish reversal at its top. The dark cloud cover pattern, highlighted in chart 1 below, shows that the bulls advanced the stock to a new high, only for the stock to gap higher the next day and fail closing lower; taking out the prior day’s low.
The current pattern in HAIN looks like another momentum stock…AMZN; post one of its earnings (see chart 2). Here AMZN gaps higher, rallies for some time, but eventually came back to test where it came from and held.
TFM Gap Analysis
Bearish Belt Hold Line: Here TFM made a new all time high but promptly retraced all of the gap; and more. A bearish belt hold is a long red candle that opens at the day’s highs and later closes at, or near, the lows. This pattern is considered to be a top reversal at a high price level. TFM, being clearly rejected, has consolidated and respected the lower end of this candle, but may be looking to break out…for it closed above its 50 day moving average and has been consolidating in a tight right triangle trading at a very low relative average true range (ATR). All below in chart 3.
WFM Gap Analysis
WFM traded down as a result of “collateral damage” after CMG dropped an earnings growth bomb on the market back on 07/19/12. WFM proceeded to then gap higher after its earnings. This retraced all of the negative CMG action. The market basically said WFM should not trade down because of CMG; consequently this gap will probably not fill in the short term.
The last three candles in the WFM chart may be forming a stalled pattern. This is where the trend slowly starts to fade and indicates a reversal. The loss of momentum is shown as candlesticks get smaller, ATR goes flat and lower, and Bollinger-band width tightens. Chart 4 & 5 below.
UNFI Gap Analysis
UNFI gapped down after their Q4 and full year fiscal 2012 earnings release. The low tick of the gap down candle was $0.50 away from the 100 day moving average; perhaps as traders realized value or at least liked a support level for a potential trade with a $0.50-ish stop. Additionally, the candle body battled above the 50 day moving average, and gave it a long bottoming wick (see chart 6). A long bottoming wick is a ‘wicked’ powerful pattern especially if a bullish confirmation bar accompanies it. As we come back to prior highs it will be important to watch price, as unhappy buyers (prior to earnings) had to sit through a stressful time and may want out.
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