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Whole Foods fails to deliver

Whole Foods fails to deliver

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Whole Foods fails to deliver

Whole Foods fails to deliver
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Think it can't get worse? Here's another lurking threat to the market.

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Think it can't get worse? Here's another lurking threat to the market.

Whole Foods shares took a nosedive in after-hours trading Wednesday after the organic food grocer reported better-than-expected earnings per share, but failed to deliver on revenue.

The company posted third-quarter earnings of $0.41 cents per share, $0.02 cents higher than analyst estimates. Revenue fell short at $3.38 billion, lower than the expected $3.39 billion.

(Read: Whole Foods shares drop on weak guidance, sales)

Now, Whole Foods hasn’t exactly been a crowd pleaser so far this year. The company has lost nearly 35 percent of its value since January, and is the second worst performing stock in the S&P 500.

So, what are the chances this stock could turn a corner?

“Some of the Wall Street analysts need to take off the rose colored glasses, because they seem to think that this is going to be a turnaround stock in the second half of this year and next year,” said Erin Gibbs of S&P Capital IQ, who doesn’t see any reason to own the stock.

Gibbs said there are two main reasons why she isn’t buying Whole Foods: disappointing earnings and increased competition. “I think this stock could still go lower unless we really see some proof of a turnaround.”

(Watch: Uncomfortable ride in Whole Foods)

MKM Partners chief market technician Jonathan Krinsky said the charts could present a short-term buying opportunity, but stressed the long-term trend is still weak. “Our view on Whole Foods, on the charts, is that

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Whole Foods has strong support at $37.

Whole Foods has strong support at $37.

it really depends on the time frame.”

“The stock is down around 40 percent from recent highs, but what’s important here is where it found support, right at that $37 [per share] area. That was resistance or where it topped out way back in 2005,” he said. “Look for a move up to $42 [per share], but if it loses that $37 support, we want nothing to do with it.”

But according to Krinsky, one of the stock’s key moving averages is

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Whole Foods is trailing its 200-day moving average.

Whole Foods is trailing its 200-day moving average.

sounding the alarm for longer-term investors. “The stock has been below its 200-day moving average for several months now, and what’s even more concerning is the 200-day [moving average] is sloping downward,” he said. “We wouldn’t suggest buying it here.”  

 Check out the video above for the full discussion on today’s episode of CNBC “Street Signs.”

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