The Kraft Heinz Company (KHC), lifting a 15-month, on the Thursday, signaling the end of a three-year downward trend that has reduced by more than 80% of the stock value. Even so, this is not a good game for the short-term trading of the crowd because the embryo of the rally may spend months filling in February 2019 13-point unfilled gap between $35 and $48. In the meantime, long-term shareholders can sit back and collect a healthy dividend yield, which is paying 4.65%.
The company has beaten and bruised between 2017 and 2020, after a botched merger between the former Kraft Foods and H. J. Heinz, the accumulation of high debt, while the market share has decreased. The COVID-19 pandemic has provided a perfect opportunity for the difficulty of the enterprise to shake strongly bearish sentiment, with the triple bonus of sales growth, high dividends, and a long-standing reputation as a defensive instrument.
Kraft Heinz Long-Term Chart (2012 – 2020)
The stock’s current incarnation began in September 2012 when Kraft Foods spun off the food and beverage operations in the Mondelēz International, Inc. (MDLZ) and Kraft Foods Group. This entity came public at $35.42 and entered a narrow trading range, with support in the low $30 and resistance in the upper $30. In March 2013 breakout attracted healthy buying interest, before the seal in the upper $40s about two months later.
Price action cleared the resistance level in March 2015, when the Kraft-Heinz merger news triggered a 15-point rally of the variance in the low $70. He added that the benefits to a healthy pace in the first quarter of 2017, the display of an all-time high of $97.77, and declined in October. The sellers came back in force in the first quarter of 2018, the sculpture of a long series of lower highs and lower lows in August 2019, when the stock reached a low point in the bottom of $20.
A rebound in the $30 was sold in November, leaving room for a significant downdraft in the first quarter of the year 2020. The stock posted an all-time low at $19.99 and has rebounded strongly, completing a 100% retracement in the horizontal 2019 resistance in the month of June. It broke out this week and which extends towards the bottom of the big book away to the mid-$30. In spite of the evasion, that the resistance of the wall tells the market players to wait for a lower risk buying opportunity.
Kraft Heinz Short-Term Chart (2018 – 2020)
The balance volume (OBV), the accumulation-distribution indicator has registered modest progress off of the March low of all time, back in broken August 2019 support in April. It is now in the head in the 2019 peak, which also marks the resistance. The stock could reach away from the resistance at the same time, the onset of a recovery that generates months of consolidative price action. A decline in the bottom of the OBV line in this configuration could provide a perfect opportunity to get board at a great price.
By adding the short-term outlook, the major gap is the blocking of the pathway in the .382 Fibonacci sale retracement level, increasing the chances that it will take a lot of time for the price action to stretch between the mid-$30, and the bottom of $50. The most optimistic scenario will be a gathering of “the gap in the space,” perhaps in response to the 30 July for the publication of the results. Even so, it is not wise to expect this traditionally slow mover to turn in for the night in a momentum favorite.
The Bottom Line
Kraft Heinz stock is entered in a new bullish trend, but returns in good health may require a lot of patience.
Disclosure: The author held no positions in the aforementioned securities at the time of publication.